For-profit hospitals see strong first quarter

While for-profit hospitals and health systems saw a strong first quarter this year, the gains may recede as the year progresses, according to Healthcare Finance News.

While hospitals and systems are still filing Q1 reports, experts project they will continue their gains from Q4 of 2014, Fitch Ratings Managing Director Megan Neuburger told the publication, citing examples such as Hospital Corp. of America's 5 percent patient admissions increase and 6 percent overall growth. These numbers track closely with Fitch's earlier predictions about for-profit providers, but they may not be here to stay, Neuburger warned.

"I think the strong volume numbers will start to taper later in the year," she said. "When we get to the second half of the year, we'll see less incremental benefit from the ACA."

The economic recovery has driven strong numbers in the for-profit sector, but Neuburger primarily attributed the good news to expansion of Medicaid and increased coverage under the Affordable Care Act, as well as growth in patients covered under commercial plans.

Not-for-profit organizations also saw improved margins due to growth in patient volume, Jeff Jones, a managing director at Huron Healthcare, told Healthcare Finance News.

However, Fitch projects the Q1 results will be the strongest of the year. The infrastructure transition from volume-based to value-based care is a major expenditure for hospitals with little tangible rewards. In addition, the emphasis on value is likely to bring with it increased emphasis on lower-paying outpatient care. Other factors that indicate the rest of the year will not be as strong as the first quarter are the rising costs of pharamceuticals, the increasing cost of labor and uncertainty over the future of the ACA if Republicans gain control of the White House and Congress as the result of the 2016 elections, according to the publication.

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