Moody’s Hospitals face heavy risk without Medicaid expansion

Ratings agency says more nonprofit care centers may be forced into partnerships with for-profits as the ACA reshapes the payment landscape.The expansion would have offset some of the reimbursement cuts slated for the Medicaid and Medicare programs by adding to the number of newly insured patients created by the act. In the Moody’s report, the court’s decision to limit the expansion blunts one of the ways the law would be credit-positive for hospitals.

New Jersey enacted several of the tenets of the Medicaid expansion before national reform became an issue, but continued questions around the financing of the industry will still have an impact here.

Because of this risk, Moody’s issued a negative outlook for the nation’s nonprofit hospital industry. The report also cited other risks, including pressure to acquire physician groups, insurers and other health care industry members in order to gain size. Also, slow revenue growth and transitions to new payment models may also increase risk for hospital bondholders.

Access to capital has long been an issue for nonprofit hospitals, and the negative outlook could force more hospitals to look to for-profit joint ventures for access to funding.

Moody’s did point to the growing number of baby boomers that will need increased care as a strong point for the industry.