Moody’s: NJ hospitals face credit pressure from M&A, reduced subsidies

beckers-articleFrom Becker’s Hospital CFO

Increased competition and lower state subsidies for charity care are putting pressure on nonprofit hospitals in New Jersey, according to a recent report from Moody’s Investors Service.

Increased healthcare consolidation has impacted hospitals across the nation, and this trend has significantly affected New Jersey hospitals. According to Moody’s, large health systems in New Jersey have joined forces and healthcare providers in New York City and Philadelphia are using out-of-state mergers and clinical affiliations to expand their presence in New Jersey.

“Increased competition will remain a credit challenge for independent hospitals and smaller health systems as large systems within the state have formed, increasing in-state competitive pressures,” said Jennifer Barr, an associate analyst with Moody’s. “The ability to adjust quickly to change will be an important determinant of New Jersey hospitals’ credit quality.”

New Jersey hospitals will also face funding pressure in fiscal year 2017, as the state will reduce subsidies for charity care by $200 million.