Fitch: Hospitals to face economic bumps in 2012

Fitch Ratings expects a stable financial environment for the for-profit segments of the healthcare industry in 2012, but cautions that the economy remains fragile and hospitals are under significant pressure.

The ratings firm projects overall revenue growth of 3.9 percent for 2012 and an overall growth in operating earnings of 1.2 percent. It notes that the overall demand for healthcare products is mostly recession-proof.

"Fitch believes most issuers in the healthcare space have sufficient financial flexibility to weather a further worsening of macroeconomic conditions within the context of current rating levels," the company said in a statement.

As for the hospital sector specifically, Fitch expects some ratings upgrades.

However, the firm notes that the healthcare industry is continuing to grapple with regulatory mandates that are part of the Affordable Care Act and that new revenue streams connected to the legislation are not expected to appear until 2014. The industry also is under pressure due to decreases in elective procedures.

Hospitals and other healthcare service providers in the United States will continue to be among the most pressured by unfavorable economic conditions. "The poor economic environment will drive very modest organic patient volume and top-line growth in 2012," the report said. "Growth in less profitable payer types, such as Medicaid and self-pay, will contribute disproportionately to organic growth."

To learn more:
- read the Fitch statement
- download the full report (reg. req.)