Moody's Investors Service has maintained its stable outlook on the U.S. for-profit hospital sector for 2016, as it expects outpatient services to continue to drive volume growth.
For-profit healthcare organizations face a number of challenges, including slowing revenue growth, but Moody's believes those challenges will be offset by continued growth in outpatient volumes. The rating agency expects outpatient volume growth to outpace inpatient admissions in 2016, as for-profit hospital operators invest in urgent care centers and ambulatory care centers.
"The Affordable Care Act is changing hospital operators' investment decisions and leading them to acquire and invest in outpatient facilities in the markets and networks in which they operate," said Dean Diaz, a Moody's senior vice president.
Moody's also noted that for-profit hospital operators' earnings could be constrained by the pending acquisition of Cigna by Anthem and Humana by Aetna.
"Consolidation among health insurers will increase their scale and bargaining power, which could ultimately reduce reimbursement rates for hospitals," said Mr. Diaz. "To maintain their bargaining power, consolidation could increase among hospital providers, but this could also force the exit of providers in markets where they lack negotiating leverage."
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