Fitch: Hospital Provider Ratings Stable Despite Weak Operating Trends

NEW YORK--(BUSINESS WIRE)-- Link to Fitch Ratings' Report: For Profit Hospital Quarterly Diagnosis: Third-Quarter 2011
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=663289

According to a new report published by Fitch Ratings, year-over-year organic operating trends remained weak for Fitch-rated for-profit hospital providers in 3Q'11. Early 2012 shows no apparent catalyst for near-term improvement as weak trends in patient volumes and payor mix, as well as a poor outlook for government payor reimbursement levels, are expected to continue to drag on topline growth.

Despite these operational challenges, most companies in the sector have solid financial flexibility relative to current rating levels. 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. Fitch also expects companies to continue to apply strong cash generation to acquisitions, supporting otherwise tepid organic growth.

Fitch notes that hospital companies are heavily leveraged to patient volumes and payor mix. Therefore, another leg down in operating trends could begin to erode profitability and cash generation unless companies can continue to demonstrate a strong ability to control costs.

Several companies in the sector recently took advantage of favorable conditions in the corporate bond market and the willingness of bank lenders to renegotiate credit agreements to refinance debt and extend maturities. Following this flurry of debt refinancing activity, balance sheets are generally in good shape. Debt maturities for most companies before 2014 are small, with the exception of HCA.

The full report 'For-Profit Hospital Quarterly Diagnosis: Third-Quarter 2011' is available at 'www.fitchratings.com'.

Additional information is available at 'www.fitchratings.com'.

Applicable Criteria and Related Research:

--'Corporate Rating Methodology', Aug. 12, 201);

--'Third Quarter 2011 Healthcare Stats Quarterly', Dec. 22, 2011;

--'2012 Outlook U.S. Healthcare: Accelerating Regulatory and Fiscal Challenges', Dec. 7, 2011;

--'U.S. Corporate Capital Expenditure Study: 2011 Surge Not Maintained', Dec. 7, 2011;

--'U.S. Leveraged Finance Spotlight Series: HCA, Inc.', Oct. 11, 2011;

--'U.S. State Budgets and the Growing Pains of Medicaid Costs', Sept. 27, 2011;

--'Healthcare REITs Well-Positioned to Manage Through Reimbursement Rate Cuts', Sept. 7, 2011;

--'For-Profit Hospital Insights: Changes in Bad Debt Reporting Will Improve Disclosure', July 26, 2011.

Applicable Criteria and Related Research:

Corporate Rating Methodology

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=647229

U.S. Healthcare Stats Quarterly -- Third-Quarter 2011

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=659609

2012 Outlook: U.S. Healthcare -- Accelerating Regulatory and Fiscal Challenges

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=659178

U.S. Corporate Capital Expenditure Study: 2011 Surge Not Maintained

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=659695

HCA, Inc.

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=651626

U.S. State Budgets and the Growing Pains of Medicaid

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=650304

Healthcare REITs Well-Positioned to Manage Through Reimbursement Rate Cuts

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=650713

For Profit Hospital Insights: Changes in Bad Debt Reporting Will Improve Disclosure

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=646892

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CONTACT:

Fitch Ratings
Brian Bertsch, +1-212-908-0549
Media Relations, New York
[email protected]
or
Megan Neuburger, +1-212-908-0501
Senior Director
Fitch, Inc.
1 State Street Plaza
New York, NY 10004
or
Robert Kirby, CFA, +1-312-368-3047
Director

KEYWORDS:   United States  North America  New York

INDUSTRY KEYWORDS:   Health  Hospitals  Professional Services  Finance  Managed Care

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