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Global Credit Research - 30 Mar 2012
New York, March 30, 2012 -- Despite the distractions of an election year and the Supreme Court review
of the Affordable Care Act, healthcare companies and providers are
looking beyond immediate issues as they seek to offset resultant lower
healthcare spending, says Moody's in its latest Healthcare
Quarterly.
"Both government and private industry are seeking ways to curb healthcare
spending which will pressure reimbursements to healthcare providers,
as well as reducing spending on drugs and medical devices,"
said Peter Abdill, a Moody's Managing Director.
Moody's new report examines how life sciences and pharmaceutical
companies, insurers, for-profit and non-profit
hospitals, medical device manufacturers and real estate investment
trusts (REITS) are planning to deal with upcoming shifts in the industry.
Pharmaceutical manufacturers are shying away from blockbuster sales models
of the past and instead focusing on innovative, high-value
products in specialty disease areas, says Moody's.
Hospitals will need to offset continued pressure on reimbursement levels.
Moody's expects robust acquisition activity among the for-profit
hospital operators as management teams seek to increase scale and efficiency.
Non-profit hospitals will also focus on gaining efficiencies and
building scale, particularly through improved information technology,
says the report.
Insurers, on the other hand are looking to improve behavior by producers
and patients, including bonus payments for improved care quality
and patient satisfaction scores. Insurers hope that behavioral
change will lead to greater cost-savings, says Moody's.
Cost-savings will be key for device manufacturers too, says
Moody's. Manufacturers will need to ensure that their products
are cost-effective as hospital administrators become increasingly
involved in purchasing decisions -- traditionally left to medical
personnel. Shrinking reimbursements may impact rent payments for
REITs, although rate cuts would need to be significant before operators
reduced paying rents, notes the report.
Moody's Healthcare Quarterly is a series of reports that examine
upcoming changes and implications for the healthcare industry, from
hospitals to insurers to REITS. The first issue offered Moody's
take on the congressional supercommittee's most likely deficit-reduction
proposals, and the possible impact on the credit of healthcare-related
companies. That, along with this second issue and other related
research can be found on www.moody's.com.
***
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Moody's: Healthcare Companies Looking Beyond Election for Long-Term Profitability
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