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Thursday, February 2, 2012

NJ has too many hospitals; cuts, shuts, sales in the works

Sales and mergers of New Jersey nonprofit hospitals "is likely to continue as more organizations contend with lackluster financial performance, revenue contraction," and lower government reimbursement, writes Moody's analyst Sarah A. Vennekotter in a report today.

Moody's rates NJ hospitals an average Baa2, "two notches lower than the national median of A3."

N.J. hospitals face tough local competition, high labor costs, and "fragmented physician communities that have not been historically aligned or well integrated with the hospitals," Vennekotter and her colleagues write. More hospital sales, closings and bankruptcies are likely; so are cost cuts, "growth strategies" and tighter cooperation between doctor groups and hospitals.  

Among deals now in progress, Moody's lists the pending merger of Underwood-Memorial Health Systems Inc., Woodbury, with South Jersey Health System. "We expect to see addtional M&A activity in our rated portfoio in the coming months and years," the report concludes. 
Posted by Joseph N. DiStefano @ 3:52 PM  Permalink | Post a comment
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About Joseph N. DiStefano
Joseph N. DiStefano writes this blog to feed his PhillyDeals column in the Philadelphia Inquirer. Joe has been a member of Bloomberg LP’s New York Finance Team, wrote the book “Comcasted,” taught writing at St. Joseph’s University, and studied economics and history at Penn. Reach Joe at 215-854-5194 and JoeD@phillynews.com
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