Financial trends in health care
look promising because of a
continuing focus on efficiency by health
care management teams, Moody's
Investors Service said in a report.
However, the rating agency said
that several factors will affect the
industry's ability to sustain profits,
such as fedoral health care reforms,
continued reductions in Medicare
and Medicaid reimbursement,
increased managed care contracting,
and the continuing debate over the
tax-exempt status of not-for-profit
institutions.
In its June 28 issue of Perspective
on Health Care Finance, Moody's
gave an analysis of health care
medians between 1991 and 1993 in the
areas of utilization, income
statements, balance sheets, and patient
revenue.
To identify trends since 1991,
Moody's examined audited financial
statements from 401 hospitals whose
unenhanced debt it rates.
Based on its review of medians,
Moody's concluded that profitability
declined slightly in 1993, but
remained adequate to cover debt
service. In addition, cash levels
continued to improve and outpatient visits
continued to increase compared to
generally stable inpatient
admissions, Moody's said.
Moody's said that the trend of
increased managed care contracting
between health care networks and
large companies or employee groups
will continue.
