Fitch: U.S. Hospitals Unlikely to Repeat Positive Admissions Growth

NEW YORK--(BUSINESS WIRE)-- A group of the largest U.S. for-profit hospital companies reported an average of 0.75% organic growth in inpatient admissions last year, making 2015 noteworthy as the first year of positive growth in admissions since 2008.

"A repeat performance of positive growth is unlikely in 2016, since the improving economy and Affordable Care Act provided a lift that can't overtake longer-term headwinds to growth, like pressure by payors to reduce short-stays and readmissions," says Megan Neuburger, Managing Director.

Fitch expects to see organic volume growth similar to fourth quarter 2015 (4Q15) when companies report 1Q results; the industry posted -1% growth in admissions and 1.2% growth in adjusted admissions for 4Q. Growth in adjusted admissions will continue to well outpace growth in admissions, with the differential dependent upon the amount of the outpatient market hospital companies can capture. During the period 2008-2015, the performance gap between growth in volumes of admissions and adjusted admissions averaged 200 basis points annually. Capital investment in more acute service lines should help to stabilize the slow erosion in admissions, but a shift to outpatient services and the stiff competition among healthcare providers to capture that market share will continue.

Pressure on hospital admissions as a result of regulatory reforms like Medicare payment penalties for readmissions should normalize eventually, but it has proved difficult to call a bottom. For example, hospital providers in rural markets have been reporting headwinds related to drops in short-stay admissions for several years. One possible explanation for this trend is that process and productivity enhancements and technological innovation are working to keep more patients out of the hospital, which is good news for patients and payors.

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. The full report, 'U.S. Hospitals' Credit Diagnosis: Noteworthy Items in Patient Volume Trends' is available at www.fitchratings.com or by clicking on the link.

Additional information is available on www.fitchratings.com.

Hospitals' Credit Diagnosis (Noteworthy Items in Patient Volume Trends)https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=880387

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View source version on businesswire.com: http://www.businesswire.com/news/home/20160420006584/en/

Fitch Ratings
Megan Neuburger, CFA, +1-212-908-0501
Managing Director
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
or
Media Relations, New York
Sandro Scenga, +1-212-908-0278
[email protected]

Source: Fitch Ratings

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