US austerity program cuts are expected to hit non-profit hospital revenues

Cuts in Medicare mandated by the federal fiscal austerity program known as sequestration will hit non-profit hospitals in the United States particularly hard, concludes a new analysis by Moody’s Investors Service, a bond credit rating business.1

The budget sequestration mandates around $1.2 trillion in federal spending cuts over the next 10 years.

As part of those cuts, reimbursements from Medicare, the US health insurance plan for elderly people, will be cut 2% a year over planned spending levels.

The reductions, which came into effect on 1 April, are projected to cut revenues for hospitals, physicians, and other healthcare providers by $11bn (£7.2bn; €8.4bn) in 2013 alone.

Medicare reimbursements are the largest source of income for most hospitals; and in the non-profit hospitals that Moody’s rates …