Amid increased cost-cutting pressures and shifting industry regulations, nonprofit hospitals will need to be flexible and focus on employee recruitment, technology and expanding access to care to remain viable, according to a new report from Moody’s Investor Service.
Nonprofit hospitals face the challenge of holding on to their high-margin inpatient services while not forgetting to invest in outpatient care.
"Outpatient facilities are an efficient way of treating lower severity cases in a cost-effective setting, though margins are generally weaker than for inpatient services. Supply of inpatient beds will decline as hospital space accommodates mainly higher acuity cases," the rating agency said.
Moody's also said it will be crucial for nonprofit hospitals to focus on the role of technology in the changing healthcare environment, although the efficiencies that technology brings are not without risks.
"Digitalization will be critical to improving efficiencies and clinical outcomes, and spurring innovation, while protecting data through cybersecurity," the rating agency said. "However, electronic medical record implementations will continue to impose financial risk through expensive installation costs, temporary disruption to patient services and operations, and the risk of receivables write-offs."
Nonprofits will also need to make smart investments in the workforce and be aggressive in recruiting top employee talent amid a physician and nursing shortage, according to Moody's. Moody's expects nonprofit hospitals with healthy liquidity to achieve the most success in terms of overall credit quality.
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