The belt-tightening that many hospital management teams have practiced since the recession began seems to have paid off -- at least for now. Not-for-profit hospital medians for FY2009 have shown improvement across all major ratios and rating categories compared with FY2008, according to a report published by Moody's Investors Service. But the hard-won gains will likely be short-lived. Moody's predicts, as uncompensated care continues to grow, volume remains flat, and Medicare inpatient payment reductions loom large. Operating and operating cash flow margins also improved in FY2009 but remain below the historic highs of 2005. Hospitals' recent strong performance will be sorely challenged, however, by Medicare's 0.4% net reduction in inpatient hospital rates, starting October 1.
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