This hospital industry sector is expected to achieve lower growth rates and less revenue and are likely to reduce operating budgets for medical laboratories
Tough financial times are ahead for not-for-profit hospitals, according to the projections of multiple rating agencies. Financial analysts attribute this to an extended period of massive and disruptive change. This is not good news for hospital-based clinical laboratory managers and pathology groups.
Big Three credit-rating agencies Moody’s Investors Service (NYSE: MCO), Fitch Ratings, and Standard & Poor’s Financial Services LLC (S&P) echoed a common theme in their 2014 outlooks for not-for-profit hospitals, which represent 60% of the nation’s hospitals. Environmental pressures will suppress revenue growth, while fresh cost-cutting measures will become increasingly harder to find. (more…)
There’s more consolidation in the hospital marketplace as institutions look to build scale and offer a fuller menu of healthcare services
Across the United States, multi-hospital health systems and stand-alone academic medical centers are looking for the right collaborations, alliances, and consolidation opportunities. This is happening because hospitals of all sizes and types recognize the need to be part of a comprehensive, integrated provider network in their region.
This is a trend that has ramifications for clinical laboratories and pathology groups that operate in the regions where these alliances and collaborations happen. That is because such collaborations can often change the competitive market for medical laboratory testing in the communities served by the partners in the alliance.
Poor rates of growth in hospital revenue and admissions is not good news for clinical laboratories
During 2010, not-for-profit hospitals showed the lowest rate of growth in at least two decades, according to a report released by Moody’s Investors Service, a holding of Moody’s Corporation (NYSE: MCO). This may be an early sign that hospital laboratories will soon be asked to work with leaner budgets during the coming year.
In its report, dated August 10, 2011, financial analysts at Moody’s predicted a mean growth rate of 4% in revenue for not-for-profit hospitals. There are multiple and complex factors contributing to the drop in mean revenue growth of not-for-profit hospitals. The report authors wrote that: