Moody's: Hospital cash flow constricted

Margins hit by increased expenses, soft patient use

A new report by Moody's Investors Service has concluded that hospital expenses are outpacing revenue for the first time in several years, and that the trend is "unsustainable."

According to Reuters, the operating performance of the 402 hospitals and hospital systems it surveyed were down. Median operating cash flow declined to 8.9 percent in the 2010 and 2011 fiscal years, compared to 9.2 percent in prior years. And AHA News Now reported that expenses grew a median of 5.5 percent, compared to 5 percent in the 2011 fiscal year.

Moody's analyst Deepa Patel concluded that hospitals are still being hit by the sluggish economy, with many would-be patients finding less costly care alternatives.

"Many hospitals incurred higher expenses associated with information technology, physician alignment, supplies and pharmaceuticals and pension. Some also had higher consulting, legal and other fees associated with mergers and acquisitions, debt restructurings and performance improvement initiatives," Patel said in a statement.

Moody's expects hospital operations to remain soft through 2013, Reuters reported.
However, AHA News Now reported that hospital balance sheets remained stable overall despite the current constrictions on cash flow.

To learn more:
- read the Reuters article
- check out the AHA News Now article
- here's the Moody's press release

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