Dive Brief:
- A new report from Moody's Investors Service concluded that expense growth continued to exceed revenue growth in the not-for-profit hospital sector in fiscal 2013. This led to tighter operating and cash flow margins, Moody's notes.
- In fiscal 2013, annual growth in expenses hit 4.6%, while revenue growth lagged at 4.1%.
- These results were driven in part by low increases in reimbursement by commercial payers, and rate cuts from Medicare and Medicaid, as well as a shift in the payer mix toward a higher level of government payers. A shift towards more outpatient than inpatient care affected the hospitals as well.
Dive Insight:
Moody's did have at least some good news for the not-for-profit hospital industry, noting that despite lower cash flow during the year, balance sheet ratios remain stable. Also median unrestricted cash investments increased in fiscal 2013 compared with fiscal year 2012. However, none of the of forces listed above—such as shifts in payer mix and lower commercial payer reimbursement—seem likely to change in the near future. Not-for-profit hospitals may have their work cut out for them.