Nonprofit Hospitals are in for Hard Times

It’s a bad time to be a nonprofit hospital. According to the credit-rating agency Moody’s, healthcare policymakers will have to reevaluate their policies regardless of whether Obama’s healthcare reform does eventually get enacted.

At the time that Moody’s reported this, the Supreme Court’s decision on the reforms wasn’t yet known. With hindsight, however, we know that the legislation was found constitutional. The health care reforms that the Republican Party has spoken of so harshly are coming through.

But healthcare reform isn’t why Moody’s sees hard times for nonprofit hospitals. Rather, it is the budget deficit that will cause the problem. Nonprofit hospitals rely heavily on local, state and US-government financing to take care of those who can’t take care of themselves, and that care will be one of the first things on the chopping block when budget cuts do eventually come along, especially now that there is healthcare reform.

However, healthcare reform will help ease the burden a little. Moody’s noted that if the most controversial part of the healthcare reform bill was enacted–that every citizen must buy healthcare–then that would be “credit negative” to nonprofit hospitals.  Thankfully, that hasn’t come to pass.

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