Hurricane Irma will have lasting impact on hospital finances, Moody's says
The canceling of elective procedures and the closing of various outpatient centers will have an immediate revenue impact.
Hurricane Irma's impact on Florida will be felt for years, and the state's hospitals won't be immune. A new report from Moody's Investors Service predicts that many of them will grapple with recovery costs in fiscal year 2018 and into 2019 that could thin their operating performance.
The credit ramifications will develop over several years, said Moody's. One of the silver linings is that, with damage assessment now underway, is seems most hospitals will reopen this week or next. The relatively quick reopenings, combined with available liquidity, will limit the immediate negative credit effects, according to the report. It will be critical to managing cash flow and timing issues while waiting for insurance and FEMA funds.
In the short term, the greatest credit challenges facing many issuers include costs associated with property loss and business interruption. For hospitals, the cancellation of elective procedures and the closing of various outpatient centers will have an immediate revenue impact, Moody's found.
Potentially mitigating these credit risks is the likelihood of insurance recovery and federal aid from FEMA.
[Also: Hospitals to feel effect on credit, operating performance from Harvey, Moody's says]
More than 20 Moody's-rated health systems closed various outpatient services or physician offices due to Irma's ferocity. Relatively few hospitals actually closed, at at this point most outpatient services have resumed. Among the institutions with the most impacted services were NCH Healthcare System; Baptist Health South Florida; Flagler Healthcare System; Jupiter Medical Center; Bethesda Healthcare System; North Broward Hospital District; South Broward Hospital District; H. Lee Moffitt Cancer Center; Shands Jacksonville Medical Center; and Adventist Health System Sunbelt.
Individual hospitals that are part of large systems headquartered out-of-state were also affected, but given the size of their parent organizations, Moody's expects them to more easily absorb the costs related to the storm. Some of the most impacted hospitals in this category include Cleveland Clinic's Weston Hospital; Trinity Health;s Holy Cross Hospital in Fort Lauderdale; John's Hopkins' All Children's Hospital in St. Petersburg; Ascension Health's St. Vincent Hospital in Jacksonville; and Mayo Clinic Jacksonville.
Moody's expects there will be particularly significant impact on smaller entities that suffered comparably more physical damage and had to close outpatient services for several days. In the short term, hospitals will incur unbudgeted costs for overtime and clean-up while losing revenue from canceled visits and procedures
Twitter: @JELagasse
Email the writer: jeff.lagasse@himssmedia.com
