Hospitals receiving meaningful use funds from the federal government are a "timely source" of money and are contributing to revenue growth, but bondholders must keep in mind the funds are temporary and only partially offset the technology costs, according to a report from Fitch Ratings.
According to CMS, more than 3,000 hospitals have received Medicare or Medicaid electronic health record incentive payments through June 2012 totaling $4 billion. The funds, part of the American Recovery and Reinvestment Act of 2009, are helping boost hospital revenues and spurring capital spending on health IT, but Fitch reminded those who invest in hospitals that the funds will eventually run dry.
"We believe it is important for bondholders to recognize that otherwise anemic revenue growth may be masked by these nonrecurring funds over the next four to five years," Fitch analysts said in the report. "Only hospitals that are already financially strong will be able to afford the high-cost investment in EHR technology."
According to CMS, more than 3,000 hospitals have received Medicare or Medicaid electronic health record incentive payments through June 2012 totaling $4 billion. The funds, part of the American Recovery and Reinvestment Act of 2009, are helping boost hospital revenues and spurring capital spending on health IT, but Fitch reminded those who invest in hospitals that the funds will eventually run dry.
"We believe it is important for bondholders to recognize that otherwise anemic revenue growth may be masked by these nonrecurring funds over the next four to five years," Fitch analysts said in the report. "Only hospitals that are already financially strong will be able to afford the high-cost investment in EHR technology."
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