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Non-Profit Hospitals Would be Hurt Most if Congressional Supercommittee Fails

Non-profit hospitals with weak credit ratings would be hurt most if the congressional “supercommittee” fails to recommend at least $1.2 trillion in cuts to Congress.

If the committee – formally, the Joint Select Committee on Deficit Reduction – fails to recommend cuts to Congress by November 23, an automatic two percent cut in Medicare payments would take effect.  According to Fitch Ratings, each percentage point cut in Medicare payments would cost hospitals 40 basis points in net revenue and would reduce operating profitability by an average of 14 percent.

Fitch’s also noted that non-profit hospitals with weaker credit ratings generally serve more Medicare patients and would be at greater risk of losses.

This report suggests that a potential supercommittee failure would be especially dangerous to urban safety-net hospitals, all of which are non-profit and many of which have weak credit ratings because they care for so many low-income and uninsured patients along with higher-than-average numbers of Medicare patients.

Read more about the Fitch Ratings report in this Bloomberg articleUS Capitol Dome.

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