Fitch: Rocky Roll-Out of ACA Insurance Expansion Could Dampen For-Profit Hospital Sector Benefits

Mon Jan 13, 2014 3:33pm EST

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(The following statement was released by the rating agency) NEW YORK, January 13 (Fitch) A successful roll-out of the health insurance expansion elements of the Affordable Care Act (ACA) would help offset the effect of headwinds to growth and profitability in the for-profit hospital sector in 2014, according to Fitch Ratings. In its early stages, however, the implementation has been fraught with difficulties. There have been technical issues with the federal health insurance marketplace website and confusion about whether health insurers can reinstate coverage for approximately five million individuals under previously cancelled health plans. The White House reported that about two million people signed up for coverage in the health insurance marketplaces through the end of December. This falls short of the government's initial goal of 3.3 million enrollees by the end of 2013. The weaker than anticipated enrollment could erode the potential benefits of the ACA for the hospital industry in 2014, including growth in patient volumes and lower levels of uncompensated care. Most companies in the Fitch-rated group of for-profit hospital companies posted weak organic growth in patient volumes in the third-quarter of 2013, with admissions and adjusted admissions dropping 3% and 0.3%, on average. Scrutiny of short-stay admissions by insurers is an ongoing issue depressing growth. Also, CMS has reported that Medicare readmission rates dropped in 2012-2013, following implementation of financial penalties for hospitals with high readmission rates. The full report, 'Hospitals' Credit Diagnosis: A Rocky Roll-Out of the Affordable Care Act's Insurance Expansion,' 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. Contact: egan Neuburger Senior Director +1-212-908-0501 Fitch Ratings, Inc. One State Street Plaza New York, NY 10004 Bob Kirby, CFA Director +1-312-368-3147 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: --'Fitch Affirms Community Health Systems' IDR at 'B+'; Outlook Negative' Jan. 8, 2014; --'2014 Outlook: U.S. Healthcare', Nov. 25, 2013; --'U.S. Leveraged Finance Spotlight Series - HCA Holdings, Inc.', Nov. 7, 2013; --'Fitch Affirms Tenet Healthcare Corp.'s IDR at 'B'; Stable Outlook' Oct. 2, 2013; --'Fitch Affirms Universal Health's Ratings at 'BB'; Revises Outlook to Positive' Aug. 19, 2013; --'The Affordable Care Act and Healthcare Providers: Assessing the Potential Impact', May 1, 2013; --'Fitch's High-Yield Healthcare Checkup', Jan. 30, 2013; --'Corporate Rating Methodology', Aug. 5, 2013. Applicable Criteria and Related Research: Hospitals Credit Diagnosis (A Rocky Rollout of the Affordable Care Act’s Insurance Expansion) here 2014 Outlook: U.S. Healthcare — Secular Challenges Require a Compelling Value Propositihere U.S. Leveraged Finance Spotlight Series - HCA Holdings, Inc. here The Affordable Care Act and Healthcare Providers (Assessing the Potential Impact) here High-Yield Healthcare Checkup: Comprehensive Analysis of High-Yield U.S. Healthcare Companies here Corporate Rating Methodology: Including Short-Term Ratings and Parent and Subsidiary Linkage 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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