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Nonprofit healthcare shows 2014 revenue growth, cost control, Moody's report finds

The 2014 revenue growth for nonprofit and public health systems is a steep jump from the sector’s all-time low in 2013.

Stock image of a hospitalStock image of a hospital

Nonprofit health systems may not be faring as badly as thought, according to a new report by Moody’s Investors Service, which shows median revenue for the sector actually rose by 4.7 percent in fiscal 2014 while the growth rate for expenses fell to 4.6 percent.

According to Moody’s, the 2014 growth for nonprofit and public health systems is a steep jump from the sector’s all-time low of 3.9 percent growth in 2013.

At the same time, the sector is clearly pulling back on expenses, from 5 percent growth in 2013 and 5.5 percent growth in 2012.

Analysts said ongoing consolidation and the benefits of reform is helping solidify the sector’s finances.

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"Revenue growth was supported by continued consolidation in the not-for-profit hospital sector and the initial influence of the Affordable Care Act , as benefits of the exchanges and Medicaid expansion were realized," Moody's Senior Credit Officer Beth Wexler said in a statement.

At the same time, expenses are being reined in as more care is shifted from expensive hospital stays to outpatient and ambulatory services.

[Also: Moody's sees rough 2015 for nonprofit healthcare]

While the results offer hope for the sector, which has struggled financially to follow the growth and solvency of for-profit healthcare, Moody’s in a December report said it expected 2015 to pose several financial challenges to nonprofit healthcare, especially in states that have not expanded Medicaid under the Affordable Care Act.

Twitter: @HenryPowderly

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