Fitch: Hospitals in States Not Expanding Medicaid Under ACA Face Financial Challenges

Mon Oct 28, 2013 5:10pm EDT

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(The following statement was released by the rating agency) NEW YORK, October 28 (Fitch) Hospitals and healthcare systems operating in states not expanding Medicaid under the Patient Protection and Affordable Care Act (ACA) will likely face greater financial challenges and rating pressure than those operating in states expanding Medicaid, according to a Fitch Ratings report. "Hospitals operating in states not expanding Medicaid, which usually have higher uninsured and poverty rates, will have to absorb the full impact of the ACA reimbursement cuts without the full benefit of increased insured volumes," said Adam Kates, Director in Fitch's Public Finance group. Texas, Florida, Georgia, Louisiana, Mississippi, and South Carolina are not expanding Medicaid and have among the highest uninsured and poverty rates, and some of the most stringent Medicaid eligibility requirements. Fitch believes hospitals in these states, particularly those with weak payor mixes, will be particularly vulnerable. Hospitals located in affluent areas with stronger payor mixes are likely to absorb non-expansion of Medicaid better than hospitals with weak service area demographics. Several mitigating factors exist, however, including the ability of a state to expand Medicaid in the future, the fact that reimbursement reductions will be implemented over a period of time, and the redistribution of disproportionate share hospital funds to hospitals with the highest uncompensated care rates. For more information, a special report titled "Adverse Expansion: Hospitals, States and Medicaid" is available on the Fitch Ratings web site at www.fitchratings.com, or by clicking on the link. Contact: Adam Kates Director +1-312-368-3180 Fitch Ratings, Inc. 70 W. Madison Street Chicago, IL 60602 James LeBuhn Senior Director +1-312-368-2059 Media Relations: Brian Bertsch, New York, Tel: +1 212-908-0549, Email: brian.bertsch@fitchratings.com. Additional information is available at 'www.fitchratings.com'. Applicable Criteria and Related Research: Adverse Expansion: Hospitals, States, and Medicaid here ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: here. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON 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.

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