Fitch: Hospital revenues rise despite soft patient admissions

For-profit hospitals are seeing weak patient volumes, but their liquidity and the revenue they are squeezing from the current patient base make up for it, according to a new report from Fitch Ratings.

Same-hospital admission volumes were down 2.7 percent in the second quarter of 2012, according to the global ratings agency, but average per-hospital revenues were up 3.7 percent.

Rural hospitals were hit much harder then their urban counterparts, with same-hospital admissions down 4.1 percent during the second quarter, compared to a drop of less than 1 percent among urban hospitals. And while adjusted admissions growth were up just over 1 percent for urban facilities, they fell more than one-half of a percent for rural hospitals, according to Fitch.

Given the relatively strong operating results and good liquidity among the for-profit hospital system, Fitch does not expect to issue any downgrades during the remainder of 2012.

However, Fitch does believe the for-profit sector does face some significant pressures, including the need to commit to capital spending. It noted that capital expenditures averaged 6.1 percent of revenue during this year's second quarter, but recent acquisitions and maintenance deferred during the Great Recession may drive up the percentage going forward.

In a separate statement, Fitch says that although it believes hospitals will escape the $11 billion in Medicare cuts that could occur next year as the result of sequestration, it still expects some reductions to be a "reality."

To learn more:
- read the Fitch statement on for-profits and report (registration required)
- here's the Fitch article on sequestration

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