May 13, 2010 / 3:13 PM / 9 years ago

Healthcare bill poses credit risk for nonprofits

Pharmacy technician Ashley Smith (L) talks to a customer about her prescriptions at the non-profit Over the Rhine Pharmacy in the Crossroad Health Center in Cincinnati, Ohio March 8, 2007. REUTERS/John Sommers II

NEW YORK (Reuters) - The U.S. healthcare overhaul bill will provide insurance coverage for millions of Americans and possibly lower healthcare cost inflation, but it poses an increased credit risk for nonprofit providers, Standard & Poor’s said on Thursday.

“We expect that the expanded insurance coverage will create winners and losers among providers, based on their existing and future payor mix, their ability to meet demand from newly insured patients, the impact on disproportionate share funding, and the impact on commercial health care insurance availability and rates,” said S&P analyst Liz Sweeney in a new report.

The outlook for 2010 remains one of stable credit quality after a period of deterioration from 2007 to 2009. But risk will increase in the next three to five years as many of the key provisions of the bill go into effect, S&P said.

The bill can be viewed as having two halves, insurance reform and delivery system and payment reform, said the report.

The former will mostly be covered by higher taxes and cuts in existing provider reimbursement formulas. But it remains unclear how the second part of the bill will be implemented, creating uncertainty for providers.

“Given that the objectives of delivery system reform in the bill include lowering costs and minimizing inappropriate admissions and services, we believe the impact on the sector’s revenue could be significant,” according to the report.

Still, the impact of delivery system and payment reform will likely be only gradual as many reforms will start with pilot or testing programs and could be changed after the testing period, the report said.

Reporting by Ciara Linnane; Editing by Padraic Cassidy

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