Jones-Patrick Health Cost Control Law leads to negative credit outlook of hospitals debt ranking

Yesterday morning, Deval Patrick signed the health care cost control legislation, labeled as “Soviet-style” by the Boston Business Journal, and supported Brad Jones and other Republican leaders.  Within hours, Moody’s hinted at a downgrade in the credit ratings of the world class hospitals in Massachusetts.  State House News has the story:

he health care cost control law signed by Gov. Deval Patrick Monday will hurt the bottom lines of Massachusetts hospitals and limit their flexibility to grow, a major credit rating agency warned Monday.

“The Legislation is credit negative for Massachusetts hospitals because it will limit their revenue growth and reduce their operating flexibility,” Moody’s Investment Services wrote in a credit analysis of the new law.

The report also suggested the money derived from a $225 million one-time assessment on health plans and major health care providers to help support community hospitals would artificially work to keep smaller hospitals in business, while limiting the expansion opportunities for larger hospital groups and hurting their credit standings.

“Another negative credit effect of the bill is that the state will use an excise tax on insurers to support smaller and less profitable hospitals, potentially allowing them to remain in business longer than would otherwise be possible and limiting the ability of larger systems to consolidate and grow through acquisitions,” Moody’s wrote.

This is just one reason that Red Mass Group went after the Republicans that supported this legislation by publishing their contact information.  This is bad public policy, and bad legislation and will lower the quality of care in Massachusetts.  Thank you to the 11 GOP Representatives who saw the light.  

About Rob "EaBo Clipper" Eno