Fitch: U.S. Hospital Consolidation Activity Hits High in 2012 Spurred By Healthcare Reform

http://pdf.reuters.com/htmlnews/8knews.asp?i=43059c3bf0e37541&u=urn:newsml:reuters.com:20130123:nBw236242a

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 resources 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

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=698854

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Fitch Ratings
Adam Kates, +1-312-368-3180
Director
Fitch, Inc.
70 W. Madison Street
Chicago, IL 60602
or
Emily Wong, +1-212-908-0651
Senior Director
or
James LeBuhn, +1-312-368-2059
Senior Director
or
Elizabeth Fogerty, New York, +1 212-908-0526
elizabeth.fogerty@fitchratings.com

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