Hospitals to see more bad debt without health reform

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While the industry awaits the U.S. Supreme Court's ruling later this month, a new report from Moody's Investors Service warns that a full or partial repeal of the health reform law will hurt for-profit hospitals.

If the Supreme Court strikes down the entire Patient Protection and Affordable Care Act, for-profit hospitals would face more financial pressure as individuals remain without health insurance, as well as market uncertainty over government cost control activity, Moody's said Wednesday in a statement. If only the individual mandate is ruled unconstitutional, for-profit hospitals still will face increased exposure to bad-debt and reduced reimbursements.

But if the Supreme Court upholds the ACA, the expected influx of newly insured patients would lower bad-debt charges at for-profit hospitals, according to the report.

The new report echoes Moody's bleak outlook in April, which concluded that fully or partially repealing the ACA would limit for-profit hospital operators' revenue growth and profit margins and constrain cash flow. It warned that HCA, Community Health Systems and Tenet Healthcare Corp. would be most vulnerable, FierceHealthFinance previously reported.

Fitch Ratings also said that the health coverage expansion under the ACA will positively affect for-profit hospitals, according to its most recent quarterly report. The ratings agency also noted that a boost in outpatient volumes in the first quarter of 2012 helped increase adjusted admissions and profitability across the for-profit hospital sector.

To learn more:
- check out the Moody's statement
- download the report (registration required)
- here's the Fitch Ratings report announcement

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