Fitch Ratings has reported some heady news for the for-profit hospital sector, but the ratings service does not expect it to coalesce into a trend.
The for-profit sector reported its first uptick in organic growth in inpatient admissions last year for the first time since 2008, Fitch said in a statement announcing the publication of the report, "U.S. Hospitals' Credit Diagnosis: Noteworthy Items in Patient Volume Trends."
"A healthier healthcare consumer was partly responsible for this stabilization in hospital volume trends, as the strengthening economy and the Affordable Care Act (ACA) combined to boost the ranks of the insured," the report said.
However, the increase was just 0.75 percent. And Fitch does not believe it will last. "The improving economy and ACA have provided a lift that cannot overtake longer-term headwinds to growth, like pressure by payers to reduce short stays and readmissions," said Fitch Managing Director Megan Neuburger in the announcement.
The ratings agency also raised concern about volumes about rural hospitals, which have been significantly lower than at urban and suburban facilities. As a result, Community Health Systems and LifePoint Health, two for-profit chains with a significant rural presence, did not experience any growth in patient volume.
Fitch has been concerned about potential issues confronting the for-profit hospital sector for some time. In January, it issued a report suggesting that pre-tax profit margins would come under pressure in future quarters, particularly given rising labor and supply costs, along with downward pressure on pricing.
The outlook for for-profits by Fitch is a bit in contrast to its not-for-profit counterparts. Fitch believed those hospitals would have a stable 2016 following a fairly robust 2015.
To learn more:
- read the Fitch statement
- here's a link to download the report (subscription required)