For the first time since 2008, Moody’s Investors Service has upgraded the outlook for not-for-profit hospitals to stable from negative.
Moody’s cited increased patient volume and reduced bad debt, both boosting cash flow. But the improvement varies a lot by geography, with hospitals in states that agreed to expand Medicaid eligibility under the Affordable Care Act doing the best.
The drop in the unemployment rate and the aging of the population have played major roles, too, as have tighter controls on employee and supply costs.
Will the improvement continue as hospitals invest heavily in population-health management, build more outpatient facilities for patients requiring less acute care, spend more on electronic health record systems and face competition from burgeoning drugstore clinics — all of which could reduce revenue? Ask us in a year.