Fitch: 2014 Outlook for Nonprofit Hospitals and Healthcare Negative; Profitability Challenged
Link to Fitch Ratings' Report: 2014 Outlook: U.S. Nonprofit Hospitals
and Healthcare Systems
The 2014 outlook for U.S. nonprofit hospitals and healthcare is
negative, reflecting pressure on patient volume, continued uncertainty
related to healthcare reform, and reimbursement challenges, according to
a new Fitch Ratings report.
'Slowdown in revenue growth evidenced in 2013 will likely deepen in
2014, driven by the declining trend of inpatient volumes, increasing use
of high-deductible health plans, the expectation for another year of
Medicare sequestration cuts and lower reimbursement rate increases from
both governmental and private insurers,' says Jim LeBuhn, Head of
Fitch's Non-Profit Health Care group.
'Despite projected increases in the overall insured population, higher
utilization may not equate to improved profitability given the general
trend in the shift of services to the outpatient setting.'
The expectation for insurance coverage expansion through the federal
health insurance exchange has been severely impacted by the delay and
uncertainty of the federal website functionality. While the state run
exchanges have had better success, the expectation that 7 million
individuals will gain coverage through state and federal exchanges is
Regardless of timing, Fitch believes the long-term impact to hospital
providers in states not expanding Medicaid will be negative.
Given the expected pressure on volumes and reimbursement in 2014,
hospital financial performance will be more impacted by management's
ability and willingness to proactively control expenses, generate
improved clinical efficiencies and quickly flex staffing to changes in
Fitch expects mergers and acquisitions activity will continue to be
robust, as hospitals seek partners to fulfill varying needs including
improving economies of scale, expanding and deepening their market
presence or bolstering service offerings across the continuum of care.
Fitch will host a conference call to discuss its 2014 Healthcare Outlook
on Dec. 12th at 2:00 PM eastern.
U.S. Participants: +1-877-467-8597
Conference and Replay ID: 17261588
International Replay: +1-404-537-3406
The replay will be available for 30 days:
Fitch's special report titled '2014 Outlook: Nonprofit Hospitals and
Healthcare' is available at 'www.fitchratings.com'
or by clicking on the above link.
Additional information is available at 'www.fitchratings.com'.
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