Sequestration Cuts Threaten Not-For-Profit Hospitals: Moody’s | Healthcare Informatics Magazine | Health IT | Information Technology Skip to content Skip to navigation

Sequestration Cuts Threaten Not-For-Profit Hospitals: Moody’s

April 9, 2013
by John DeGaspari
| Reprints
Another challenge to hospitals already facing limited revenue growth

The two-percent reduction in Medicare reimbursement rates mandated by federal sequestration over the next 10 years will make an already challenging operating environment for not-for-profit hospitals even more difficult, says Moody’s Investor Service in a new report.

“Many not-for-profit hospitals are already facing low revenue growth from both governmental and private insurance payers, and new Medicare cuts will exacerbate these problems, says Sarah Vennekotter, Moody’s assistant vice president and analyst who write the report, “The Sequester Series: Medicare Reductions Present New Headwinds for Not-For-Profit Hospitals.”

The Centers for Medicare and Medicaid Services (CMS) estimates the cuts will lower revenues of hospitals, physicians, and other healthcare providers by a total of $11 billion by 2013. The report notes that most vulnerable to those cuts are hospitals that have an outsize reliance on Medicare reimbursements, especially those that have not yet budgeted for the cuts or made commensurate adjustments to expenditures.

The report also notes that sequestration could have an indirect impact on hospitals through slowing economic growth, leading to admission declines and deterioration of the mix of payers as individuals lose their employer-based commercial insurance plans.

Moody’s also expects cuts to federal healthcare funding to persist after sequestration as federal debt reduction becomes a priority, which it says is an important consideration in its negative outlook for the not-for-profit healthcare sector.

According to Reuters, this is the fifth year that Moody’s has had a negative outlook for not-for-profit hospitals.



Community Data Sharing: Eight Recommendations From San Diego

A learning guide focuses on San Diego’s experience in building a community health information exchange and the realities of embarking on a broad community collaboration to achieve better data sharing.

HealthlinkNY’s Galanis to Step Down as CEO

Christina Galanis, who has served as president and CEO of HealthlinkNY for the past 13 years, will leave her position at the end of the year.

Email-Related Cyber Attacks a Top Concern for Providers

U.S. healthcare providers overwhelmingly rank email as the top source of a potential data breach, according to new research from email and data security company Mimecast and conducted by HIMSS Analytics.

Former Health IT Head in San Diego County Charged with Defrauding Provider out of $800K

The ex-health IT director at North County Health Services, a San Diego County-based healthcare service provider, has been charged with spearheading fraudulent operations that cost the organization $800,000.

Allscripts Touts 1 Billion API Shares in 2017

Officials from Chicago-based health IT vendor Allscripts have attested that the company has reached a new milestone— one billion application programming interface (API) data exchange transactions in 2017.

Dignity Health, CHI Merging to Form New Catholic Health System

Catholic Health Initiatives (CHI), based in Englewood, Colorado, and San Francisco-based Dignity Health officially announced they are merging and have signed a definitive agreement to combine ministries and create a new, nonprofit Catholic health system.