Dive Brief:
- A preliminary report from Moody's Investors Service finds that not-for-profit hospitals have reached a turnng point after three years in which costs outpaced their modest revenue gains.
- The improvement is attributed to factors including hospital cost-cutting, increases in insurance coverage, transitioning patients to lower-cost healthcare settings, health system consolidations, and improvements in the economy.
- The median for revenue growth at not-for-profit hospitals for 2014 was 4.7%, which is just above the median increase in expenses of 4.6%, Moody's found.
Dive Insight:
While the relief is good news following the all-time low in revenue growth in 2013, Moody's warns that its premiminary analysis only represents those with an early fiscal year ending in September 2014 or before. It notes that some systems with fiscal years ending in December are weaker and could potentially pull down the overall results.
Moody's analyst Mark Pascaris also warns that hospitals will continue to face payment cuts and that the improved economy could translate to increased costs in wages. Hospitals will also find it increasingly difficult to continue to cut costs because they have now already scaled back in all the easiest ways.
"There are still a lot of headwinds in the sector," Pascaris is quoted in Modern Healthcare. "Even when times are relatively benign, I think they'll be cautious."
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