IT, Other Investments Causing Weakening Financials for Hospitals

Thanks to information technology (IT) and other investments, hospitals are incurring higher expenses, and for the first time in three years showing weakening financial performance, a recent report from Moody’s Investors Service found.

Moody’s found that in hospitals, expense growth surpassed revenue growth for the first time since fiscal 2008. Median total operating revenue growth rate declined to 5.2 percent in fiscal 2012 from an improved 5.4 percent in fiscal 2011. This is because of a higher rate of investment.

“Many hospitals incurred higher expenses associated with information technology, physician alignment, supplies and pharmaceuticals and pension. Some also had higher consulting, legal and other fees associated with mergers and acquisitions, debt restructurings and performance improvement initiatives," Moody's assistant vice president and analyst Deepa Patel, said in a statement.