Overall outlook for Healthcare changed from stable to negative; 2014 will be at a “tipping point”

  • Negative Pressures are accelerating:
  • Ability to contract for revenue increases and the ability to make major cost deductions is becoming harder
  • We are dealing with physician cost and capital cost pressures.
  • State Medicaid is growing as a percentage of the payer mix: unknown whether the ACA subsidies will really help the hospitals
  • If the Balance Sheet is weak now, it may be too late to improve it to a sufficient degree.
  • However, on the positive side, many hospitals are showing good strength in cash position built over the last few years.
  • Equal number of upgrades as downgrades in 2013. Likely to shift to more downgrades than upgrades in 2014. Nearly 400 rating affirmations in 2013.
  • Will CFOs be able to discern real P&L benefits from the massive IT investments being made? Theoretically yes in the longer term, but really unknown.

What are your thoughts on CFOs discerning real P&L benefits from IT investments?