So far, CMS' release of hospital charges has had little to no effect on hospital credit ratings, but it could put downward credit pressure on the industry in the long term as wide range of pricing invites stronger regulation and oversight, according to a report from Moody's Investors Services.
The prices listed in the CMS release reflect hospitals' pre-negotiated prices, which hospitals typically discount heavily when contracting with payors, Moody's Assistant Vice President and Analyst Daniel Steingart said in the report.
"[However,] there is substantial risk the persistence of unexplainable differences in hospital charges will invite greater regulation of the industry and supports our negative sector outlook," Mr. Steingart said in the report. "Longer-term credit implications are negative for hospitals…especially those that are truly higher cost."
Hospitals and health systems may begin making prices more transparent to customers as a marketing strategy, although the risk remains that regulators will look to intervene to balance out prices.
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The prices listed in the CMS release reflect hospitals' pre-negotiated prices, which hospitals typically discount heavily when contracting with payors, Moody's Assistant Vice President and Analyst Daniel Steingart said in the report.
"[However,] there is substantial risk the persistence of unexplainable differences in hospital charges will invite greater regulation of the industry and supports our negative sector outlook," Mr. Steingart said in the report. "Longer-term credit implications are negative for hospitals…especially those that are truly higher cost."
Hospitals and health systems may begin making prices more transparent to customers as a marketing strategy, although the risk remains that regulators will look to intervene to balance out prices.
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