|[January 23, 2013]
Fitch: U.S. Hospital Consolidation Activity Hits High in 2012 Spurred By Healthcare Reform
NEW YORK --(Business Wire)--
Healthcare reform and changing reimbursement methodologies are
dramatically altering the landscape for U.S. nonprofit hospitals,
driving the highest consolidation activity since 2000 and increasing the
focus on the operating environment and efficiencies, according to a new
Fitch Ratings report.
'While traditional factors such as economies of scale, access to capital
and market share continue to play a role in hospital consolidation, a
Fitch survey revealed strategic considerations and preparation for
healthcare reform were the primary drivers in 2012 - leading to
consolidation activity not seen in over a decade,' said Adam Kates,
Director in Fitch's Public Finance group.
Expected reimbursement reductions and changing reimbursement
methodologies are forcing providers to operate more efficiently and
improve coordination across the continuum of care.
Providers are also increasingly exploring new consolidation and
alignment strategies with other hospitals, physicians, and insurers.
The implementation of new strategies, while potentially positive,
introduces execution risk. Hospitals have been taking steps, including
strategic partnerships and incremental adoption of new operating models,
to mitigate some of the execution risk.
Given the capital resurces and managerial expertise new alignment
strategies require, the credit-metrics gap between lower rated and
higher rated hospitals is expected to continue to widen.
For more information, see Fitch's special report titled 'Nonprofit
Hospital Consolidation, Integration and Alignment' available at 'www.fitchratings.com'.
Additional information is available at 'www.fitchratings.com'.
Applicable Criteria and Related Research: Nonprofit Hospital
Consolidation, Integration, and Alignment
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