For-profit hospitals showed weak growth during the third-quarter of 2011, and 2012 shows little prospect for improvement, according to a new report from Fitch Ratings.
New York-based Fitch warned that for 2012 there was "no catalyst for near-term improvement," citing weak patient volumes and little hope to receive payment bumps from Medicare and Medicaid.
However, the ratings agency noted that most for-profit hospital operators are in stable financial positions, with many of them having refinanced debt during an opportunistic window during 2011. As a result, few other than HCA have any significant debt service obligations prior to 2014.
"Despite these operational challenges, most companies in the sector have solid financial flexibility relative to current rating levels," Fitch said in a press release. "Profitably and cash flow generation will be supported in 2012 by low inflation in the cost of labor and supplies and the cost control efforts of management," it added. Fitch also predicts hospitals will continue to apply strong cash generation to acquisitions, supporting otherwise tepid organic growth."
The agency noted that a Supreme Court decision on the Affordable Care Act that effects the individual mandate or Medicaid expansion could hurt hospital finances in 2014 and beyond.
To learn more:
- read the Fitch press release
- here's the Fitch report (registration required)