Moody's Investors Service changed its outlook to stable from negative on the nonprofit healthcare and hospital sector for 2020. The outlook revision reflects Moody's expectation that nonprofit hospitals' revenues will increase.
Moody's said operating cash flow will grow 2 percent to 3 percent next year due to the revenue boost and stricter cost control efforts.
Revenue growth is expected to increase between 4 percent to 5 percent because of several factors, including an increased Medicare reimbursement rate, commercial insurer rate bumps in most states and patient volume growth.
But hospitals will continue to face rising labor costs, cybersecurity breaches and legislative risks, Moody's said.
Moody's also forecasts continued rapid hospital consolidation next year as larger hospitals seek leverage in negotiations with commercial insurers through mergers and acquisitions.
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