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.



Former Michigan Governor to Serve as Chair of DRIVE Health

Former Michigan Governor John Engler will serve as chair of the DRIVE Health Initiative, a campaign aimed at accelerating the U.S. health system's transition to value-based care.

NJ Medical Group Launches Statewide HIE, OneHealth New Jersey

The Medical Society of New Jersey (MSNJ) recently launched OneHealth New Jersey, a statewide health information exchange (HIE) that is now live.

Survey: 70% of Providers Using Off-Premises Computing for Some Applications

A survey conducted by KLAS Research found that 70 percent of healthcare organizations have moved at least some applications or IT infrastructure off-premises.

AMIA Warns of Tax Bill’s Impact on Graduate School Programs in Informatics

Provisions in the Republican tax bill that would count graduate student tuition waivers as taxable income would have detrimental impacts on the viability of fields such as informatics, according to the American Medical Informatics Association.

Appalachia Project to Study Relationship Between Increased Broadband Access, Improved Cancer Care

The Federal Communications Commission and the National Cancer Institute have joined forces to focus on how increasing broadband access and adoption in rural areas can improve the lives of rural cancer patients.

Survey: By 2019, 60% of Medicare Revenues will be Tied to Risk

Medical groups and health systems that are members of AMGA (the American Medical Group Association) expect that nearly 60 percent of their revenues from Medicare will be from risk-based products by 2019, according to the results from a recent survey.