According to a recent Wall Street Journal article, nonprofit hospitals' income continues to decline, as does their median rate of revenue growth. However, the performance of nonprofit hospitals contrasts with the performance of publicly traded hospitals – some of which maintain that an improving economy coupled with a wave of patients who have gained health coverage has served to strengthen their performance. Why, then, are nonprofit hospitals not sharing in these gains?
Analysts with Moody's Investors Service point out that many nonprofit hospitals are not seeing strengthened performance, in part because they are stand-alone facilities or smaller systems that have struggled to negotiate higher payment rates from insurers or to reduce expenses as federal payments declined. Nonprofit hospitals, therefore, face a critical question: Will income rebound as more people gain coverage in private insurance marketplaces and through state-run Medicaid programs? The answer is not clear.
Nonprofit and public hospitals' financial "experience has really been across the board," according to Shawn Gremminger, head lobbyist for America's Essential Hospitals. It remains to be seen whether nonprofit hospitals will continue to see declines in income and median rate of revenue growth. Moody's predicts that this trend is likely to continue. Unfortunately for nonprofit hospitals, their typically smaller size, their geographic locations, and the continuing changes in healthcare laws, among other things, leave them with little short-term optimism for bucking the trend.