Revenue Growth at Not-For-Profit Hospitals Lowest in a Decade

Not-for-profit rated hospitals showed the lowest revenue growth rate in more than a decade and reported flat patient admissions in 2010, a negative indicator for revenue growth in 2011, according to a Moody’s Investors Service report.

Entitled “Revenue Growth Lowest in More Than a Decade for Not-For-Profit Hospitals in 2010, According to Preliminary Median Data,” the report finds that “median revenue growth experienced a sharp decline from 6.5 percent in 2009 to 4.2 percent in 2010, the rating agency reported.”

“Management at not-for-profit rated hospitals reduced expense growth to a median of 4.4 percent, but Moody’s says more cuts in expenses will be difficult in the future as hospitals face pressure from all payers, leading to limited revenue growth. Balance sheets improved as median cash on hand increased to 164 days in 2010, from 150 days in 2009.”

Separately, Moody’s announced rating volatility slowed in the first quarter, according to a report entitled “U.S. Not-For-Profit Healthcare Quarterly Ratings Monitor: Rating Volatility Lessened in First Quarter 2011.” Eleven rated not-for-profit hospitals were downgraded or upgraded, the lowest quarterly total in more than 10 years. “Moody’s anticipates downgrades to continue outpacing upgrades throughout 2011 as hospitals continue struggling to achieve strong revenue growth due to mounting reimbursement pressures,” the article says.