Dive Brief:
- In 2013, revenue growth at nonprofit hospitals in the nation was a mere 3.9%—lower than it has been since the Great Recession, according to Moody's Investors Service.
- Reasons for the low numbers include a drop in admissions and outpatient services, reduced reimbursements from private and government insurers and higher levels of bad debt. Moody's found that larger systems tended to have more revenue growth than smaller ones.
- Hospitals previously saw an increase in revenue of about 7% annually. But for nonprofits, expenses were higher than revenue and one-quarter of the systems surveyed had an operating loss. Their for-profit competitors, on the other hand, did see profits: The Brentwood, Tenn.-based LifePoint chain increased quarterly earnings in July by 44%, for example.
Dive Insight:
It was assumed that the Affordable Care Act might help nonprofit hospitals in some ways, but the numbers aren't bearing out yet. Many estimate it will be 2015 until they start benefiting from more patients covered under the exchanges and expanded Medicaid. Hospitals based in states that do not expand Medicaid will still likely be challenged and will have to find inventive ways to make up for cuts in reimbursement and disproportionate share hospital funding.