Becker's Hospital Review

68 CFO / FINANCE Moody's: Nonprofit hospital rating downgrades rose sharply in 2017 By Alia Paavola D espite a strong economy and low un- insured population, nonprofit hospi- tal rating downgrades sharply out- paced upgrades throughout 2017 — creating a downgrade-to-upgrade ratio of 3.4 to 1.0, which is more than double the 2016 ratio of 1.5 to 1.0, according to a report by Moody's Investors Service. In 2017, there were 41 credit downgrades and 12 credit upgrades for nonprofit hospitals, compared to 32 credit downgrades and 21 credit upgrades in 2016. Moody's attributed the credit stress in 2017 to rising labor and supply costs coupled with a low revenue growth environment. "An acute nursing shortage in many markets, along with rising supply and pharmaceutical costs, resulted in expense growth outpacing revenue growth for many hospitals and health systems," the Moody's report reads. While hospitals of all sizes were downgraded, 60 percent of the downgrades in 2017 affected smaller health systems with less than $1 bil- lion in total operating revenue. In addition, 12 of the downgrades occurred in Pennsylva- nia and Ohio, reflecting the lagging economy, aging demographics, competitive service area and commercial payer challenges in the Rust Belt area. Although downgrades outpaced upgrades in 2017, Moody's affirmed the vast majority of ratings in 2017, which is in line with histor- ical trends. n Amazon in talks with big banks to create checking-account-like product: 4 things to know By Ayla Ellison A mazon put out a request for proposals last fall from several big banks, including JPMorgan and Capital One Financial, about creating a checking-account-like product to offer its customers, people familiar with the matter told The Wall Street Journal. Here are four things to know. 1. Amazon wants to create a hybrid-type checking account that would appeal to those without bank accounts and to younger customers. 2. The initiative is still in early stages, but it wouldn't involve Amazon becoming a bank, sources told WSJ. Although it is too early to say what the final product would look like, it could allow customers to write checks or access a nationwide ATM network, according to the report. 3. Amazon has been exploring a bigger push into finance for years, and providing customers with a checking account would reduce the fees it pays banks and payments proces- sors. However, this type of arrangement is more complicated than a co-branded credit card, and there is not much prece- dent for this type of model, according to the report. 4. A poll by LendEDU of 1,000 consumers who purchased something from Amazon in the past 30 days revealed 44.5 percent of consumers were open to the idea of using an account created by Amazon as their primary bank account, while 39.1 percent were unsure and 16.4 percent rejected the idea. n Wyoming hospital resolves 20 malpractice suits that pushed it into bankruptcy By Ayla Ellison P owell (Wyo.) Valley Healthcare has emerged from bank- ruptcy, and the hospital's reorganization plan resolves about 20 malpractice lawsuits that pushed the facility into bankruptcy in 2016. Powell Valley Healthcare filed for Chapter 11 bankruptcy pro- tection in May 2016. At that time, the board said the only rea- son for entering bankruptcy was a flood of litigation over sur- geries performed by orthopedic surgeon Jeffrey Hansen, MD. Former patients of Dr. Hansen brought the lawsuits over sur- geries performed in 2013 and prior. He was employed by Powell Valley Healthcare from 2006 through February 2014. Dr. Hansen, who has denied any wrongdoing, resigned from the hospital after being suspended over patient safety concerns. The hospital board said filing for Chapter 11 bankruptcy would allow the hospital to effectively deal with the lawsuits while not disrupting operations. Powell Valley Healthcare's reorganization plan went into effect March 1, according to the Powell Valley Tribune. The reorga- nization plan calls for the hospital to pay $3 million over the next eight years to the patients who filed claims against the hospital. The patients will also receive $3 million from UMIA Insurance, which provided medical malpractice insurance to the hospital from August 2014 through August 2016, and an additional $127,500 from a company that helped manage the hospital while Dr. Hansen was employed there. The amount each patient will receive will be determined through mediation at a later date. n

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