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Fitch: U.S. Hospitals Experiencing Weaker Volumes of Less Acute PatientsA group of the largest Fitch-rated U.S. for-profit hospital companies reported an average of 0.2% organic growth in inpatient admissions and 2.8% organic growth in admissions adjusted for outpatient activity in first quarter 2016 (1Q16). Year-over-year rates of growth dropped significantly versus 1Q15, and although seasonal issues played a role, secular headwinds to growth are persistent. These headwinds are having the greatest effect on less-acute patient volumes and it was evident in first-quarter results. Companies with a business mix weighted towards rural hospital markets with a high exposure to less-acute patient volumes, including Community Health Systems, Inc. (CHS) and LifePoint Health, averaged minus 3.7% year-over-year organic growth in admissions and 0.7% growth in admissions adjusted for outpatient activity, versus 2.3% and 3.8% respectively for peers focused on large suburban and urban hospital markets. Fitch does not expect a near-term reversal or even an easing of secular headwinds to less-acute hospital patient volumes. Most notably, these include pressure by payors to reduce short-stay admissions and efforts to reduce readmissions to avoid financial penalties. Growth in the consumer share of healthcare spending through high-deductible health plans encourages patients to seek care in less expensive settings outside of the acute-care hospital. Technological advances that allow more complex cases to be handled in outpatient settings aid payors and patients in their efforts to reduce relatively expensive hospital care. Companies that are highly exposed to less-acute volumes are responding by actively adjusting the portfolio of care delivery assets to improve the business mix. While this is a strategy that Fitch believes is necessary to improve both organic growth prospects and profitability, it does add risk to the credit profile. Amongst the group of Fitch-rated companies, the effect of this business mix adjustment is currently most evident for LifePoint Health. Fitch is forecasting a 140 bps decline in LifePoint's operating EBITDA margin in 2016 due to the integration of less-profitable acquired hospitals. The full report, 'Hospitals' Credit Diagnosis: Tough Headwinds to Less-Acute Patient Volumes' is available at www.fitchratings.com. The report provides a summary of the quarterly operating performance and credit metrics of companies in the for-profit hospital sector, including detailed debt and organizational structure charts. Additional information is available at www.fitchratings.com.
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U.S. Leveraged Finance Spotlight Series - HCA Holdings, Inc. ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON (News - Alert) THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE. View source version on businesswire.com: http://www.businesswire.com/news/home/20160629006247/en/ |
