The financial outlook for the healthcare industry worldwide in 2018 is stable, according to Moody's Investors Service.
Moody's predicts that, in many countries, healthcare will represent a rising portion of their gross domestic product (GDP), which offers plenty of chances for healthcare companies to grow. However, it could tighten governments' purse strings.
Michael Levesque, a senior vice president for Moody's, said that as demand for healthcare increases, payers are likely to focus on initiatives that improve cost-effectiveness. Legislators can support this by allowing for greater price flexibility or reducing demand, but Moody's projects that insurers will continue to have patients shoulder more of the cost burden.
"Global demand for healthcare products and services will continue to rise in 2018 due to aging populations in mature markets and improving access to healthcare in emerging ones, as well as new products and technologies," Levesque said in the announcement. "But increasing spending on healthcare will also create budgetary pressures, which in turn will drive cost-containment efforts and other political risks."
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Moody's predicts that for-profit hospitals could see their pretax earnings grow by 2.5% to 3%. Increases in reimbursement from private payers could offset reductions from government insurers. Pushing more patients to seek care in low-cost settings reduces inpatient costs, but labor costs are on the rise, Moody's said.
Healthcare spending in the U.S. skyrocketed in 2014 and 2015, but the spending rate slowed last year, according to data from the Centers for Medicare & Medicaid Services. Per capita spending on healthcare in 2016 was over $10,000. Out-of-pocket spending continues to grow as well.
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Healthcare spending growth has outpaced growth in the country's GDP. Despite these costs and high spending, the U.S. ranks last among developed nations in healthcare quality.
The U.S. has ranked last in each of six similar reports. Another recent global study found massive inequity within the United States in terms of access to care and care quality.