Falling revenue growth, due to reimbursement pressures from public and private payers, is the biggest challenge facing nonprofit providers, according to a report from Moody's Investors Service. Nonprofit hospital revenue growth is at its lowest in 20 years, and Moody's says rating downgrades will increase in the short term unless hospitals reduce expenses and boost productivity enough to offset the decline.
In fiscal 2010, inpatient admissions declined by .4 percent compared with that of previous years partly due to a drop in elective surgeries. The weak economy and high unemployment rate also discouraged patients from seeking care. While these conditions boosted Medicaid enrollment, federal and state budget deficits likely will lead to rate cuts, which will stress hospitals for the next several years.
Moody's identified two additional challenges to hospital revenue growth: the transition from fee-for-service care to bundled payments and the conversion to the ICD-10 coding system by Oct. 1, 2013.
For more information, go to www.moodys.com.