qotd: Moody’s revises outlook for not-for-profit/public health care sector

Moody's Investors Service
August 26, 2015
Moody's revises US not-for-profit healthcare outlook to stable from
negative as cash flows increase

Moody's Investors Service has revised the outlook for the US
not-for-profit and public healthcare sector to stable from negative due
to improvement across the industry's fundamental business, financial and
economic conditions. The outlook had been negative since 2008.

Following several years of flat growth, operating cash flow growth
increased to 12.3% in 2014 from 0.3% in 2013.

Moody's says factors driving the stronger operating cash flow are
increases in the number of insured individuals and a reduction in bad
debt, particularly in states which expanded Medicaid eligibility.

The outlook change to stable from negative expresses Moody's views for
the sector will neither erode nor significantly improve materially for
the 12 to 18 months. Looking beyond that horizon, pressures linger.

"The not-for-profit and public healthcare sector industry faces
long-term challenges stemming from who pays for care, how providers are
reimbursed, and changes in patient behavior. These risks may weigh on
profitability and growth," says (Moody's Vice President -- Senior
Analyst Daniel Steingart ).

https://www.moodys.com/research/Moodys-revises-US-not-for-profit-healthcare-outlook-to-stable--PR_333323

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Comment by Don McCanne

It seems ironic to celebrate profits in the not-for-profit and public
health care sector, but at least this Moody's report does show that the
not-for-profit/public sector has moved from negative to stable as cash
flows increase. That is reassuring.

Nevertheless this industry still faces long-term challenges, especially
based on uncertainties of future funding.

This sector is particularly important since it serves as the primary
safety net for those who have impaired access for reasons such as being
uninsured. So it is essential that a reliable source of adequate funding
is always available.

How can we do that? Simple. Establish a single payer national health
program which will fund the entire health care delivery system
equitably. Part of that process involves converting the investor-owned,
for-profit delivery system to not-for-profit status. Why? The primary
mission of non-profits is patient service whereas the primary mission of
for-profits is creating wealth by achieving a maximum return on
investment. The former works better for patients than does the latter.

Although it is nice that the not-for-profit/public sector has
temporarily stabilized, we could be assured of more funds in the future
if the administrative waste of our entire system were eliminated. Single
payer would ensure stability in our system well into the indefinite
future… and beyond.