Dive Brief:
- For the sixth year in a row, Moody's Investors Service has issued a negative outlook for the nonprofit hospital business.
- Among the biggest challenges nonprofits will face over the next 12 to 18 months will be weak revenue growth, lingering at 3% to 3.5%, as compared with 5.2% in 2012.
- The dip in revenue growth is due to many factors, including lower Medicare payments, falling DSH payments under PPACA, shifts from inpatient to outpatient care, high IT expenses and severely reduced rate increases from commercial payers.
Dive Insight:
This should be a pivotal year for nonprofoits, which are facing some of the biggest challenges the industry has encountered in many years -- ICD-10, EMR and other health IT adoption, falling margins and uncertainties as to where PPACA will take the industry.. These pressures should drive a significant number of integrated partnerships, acquisitions and mergers, as well as acquisitions of key physician groups in an effort to control more of their marketplace. But it also seems likely that some nonprofits will simply founder. As Moody's says, it's going to be a rough year.