Fitch: Hospital bad debt could moderate under ACA

Bad debt expenses for for-profit hospitals, which grew considerably during the Great Recession, have not receded during the economic recovery and Fitch Ratings Service isn't sure the Affordable Care Act will make much of a difference.

Although Fitch officials believe an increase in the insurance rolls under the ACA will ease bad debt, "forecasting the precise effects of the ACA insurance expansion on uncompensated care and bad debt expense is complicated by uncertainty over the pace and progress of the growth of the insured population," the agency said in a statement.

"Caring for the uninsured population is the most important driver of hospitals' bad debt expense,"  according to the Fitch report, In a survey of eight of the major for-profit hospital operators, allowances for bad debt increased significantly between 2008 and 2012 for all of them, according to Fitch, although the agency noted that differences in accounting for bad debt between the hospital chains made it difficult to conduct an apples-to-apples comparison.

Meanwhile, other industry observers are concerned that hospital bad debt could still mount, primarily because the coverage offered through the state health insurance exchanges do not pay as well as commercial plans.

To learn more:
- read the Fitch statement on bad debt
- here's the Fitch report (.pdf, registration may be required)

Related Articles:
Even under ACA, hospital bad debt could mount
S&P: Long-term forecast for hospitals uneven
Hospitals worried about pending DSH cuts
Moody's: DSH cuts put hospital bond ratings, state budgets at risk
National hospital chains see better M&A value creation