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Moody's: Urban hospitals face downgrades if Medicare funding is cut

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One of the big fears hospitals face under reform is that Medicare rates will drop to even lower levels, worsening an already-difficult situation. That prospect also worries analysts at Moody's Investors Service, who say that urban hospitals with high overhead, in particular, could be hit hard by such changes, and possibly face downgrades in their debt ratings.

Right now, the 17 highest-cost hospitals found in a recent report by Dartmouth are based in densely-populated or urban areas. Such hospitals face high expenses for many reasons, including that they frequently offer money-losing, resource-intensive trauma care; that they run costly research programs; that they serve high-poverty areas and diverse populations with complex health needs; and that their regions often have higher costs of living.

These hospitals could face a crisis if deep Medicare cuts come with the final reform bill leaving Congress, Moody's notes. Meanwhile, hospitals which are part of multi-state systems, and enjoy economies of scale, are likely to do reasonably well under reform. While their costs aren't going to change much, they may very well snag more patients with health insurance than in the past, the agency said.

Get more background on the Moody's report:
- read this Reuters item

Related Articles:
Moody's pans profit outlook for for-profit hospitals
Moody's leery of uncompensated care backlash
Moody's: Non-profit hospital credit downgrades at peak since 2001

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Each learning experience baffles my thinking pattern. To begin with, union employees pay union dues and within his or her benefit package; each individual and his or her family members, whom are under the age of 18 years of age, can obtain medical,dental and pharmacy coverage.
On the other hand the disabled and senior citizens pay $90.00 and up per month for twelve consecutive months. But this population has to bring his or her credit card to the pharmacy and the dentists office.
The tiers which the medications are evaluated for pricing can prevent the senior citizens and disabled to go without. Yes, he or she can apply for the poverty program. Most times the senior citizen or disabled would have to be an existing indigneous consumer.
Thirdly, some dentists bill his or her consumers by the way he or she is dressed. There are floor prices, ceiling prices and medium prices for patients. The medicare patient does not have a $1200.00 write off.
Therefore, how is it possible that union employees can obtain a more lucrative healthcare plan? The senior citizens and the disabled whom are not indigneous pay the exact amount monthly for benefits. But there is a disequilibrium in health treatment resources.

per article..
"Meanwhile, hospitals which are part of multi-state systems, and enjoy economies of scale, are likely to do reasonably well under reform. While their costs aren't going to change much, they may very well snag more patients with health insurance than in the past, the agency said."

here are some of the risks of seeing more patients with insurance.
1)Hospitals could lose disproportionate share payments..
2)Hospitals could lose tax exemption since charity care will not exist..
3)Hospitals will need to add incremental staff to handle insurer followup and potential denials..
4)Hospitals will have more co-pays and deductibles to collect which people don't pay today..
5)It is assumed that people who covered under a public program will be enrolled..coverage does not equal enrollment..we have over 30% of the uninsured (now 14 mil) who could be enrolled and are not..
6)insurers negotiating lower rates because they beleive hospitals have more "covered" patients

Having more patients with insurance/coverage may actually turn out to financially hurt hospitals..

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