Generally, non-profit hospital and health systems should expect stable finances next year, but maintaining profitability and reasonable expenses will be harder to do beyond 2013, according to a report from Fitch Ratings.
Fitch analysts said 2013 may be relatively productive for non-profit systems, as they continue to focus on operating efficiency, modest managed care rate increases and a higher-than-expected Medicare market basket increase that somewhat stabilized 2013 payments from CMS.
However, many provisions of President Barack Obama's signature healthcare law, the Patient Protection and Affordable Care Act, will go into effect in 2014. Fitch's report said because measures such as expanded Medicaid and health insurance exchanges will finally begin, there will be "increased uncertainty…as opportunities for further cost cutting wane and a wave of expected reimbursement reductions are realized."
While many in the hospital industry also fear the 2 percent Medicare cuts associated with sequestration, which will begin in January if the federal government cannot reach a new deficit deal, Fitch actually believes "[non-profit] hospitals should be able to absorb the impact of the reduction," according to the report. The rationale? Prudent non-profit hospitals and health systems have already been using conservative reimbursement assumptions in their upcoming budgets.
In November, Fitch analysts said 2013 looked challenging for many others within the healthcare industry, such as for-profit hospitals and medical device companies. Overall, Fitch is forecasting low, single-digit growth for most healthcare companies next year.
Fitch analysts said 2013 may be relatively productive for non-profit systems, as they continue to focus on operating efficiency, modest managed care rate increases and a higher-than-expected Medicare market basket increase that somewhat stabilized 2013 payments from CMS.
However, many provisions of President Barack Obama's signature healthcare law, the Patient Protection and Affordable Care Act, will go into effect in 2014. Fitch's report said because measures such as expanded Medicaid and health insurance exchanges will finally begin, there will be "increased uncertainty…as opportunities for further cost cutting wane and a wave of expected reimbursement reductions are realized."
While many in the hospital industry also fear the 2 percent Medicare cuts associated with sequestration, which will begin in January if the federal government cannot reach a new deficit deal, Fitch actually believes "[non-profit] hospitals should be able to absorb the impact of the reduction," according to the report. The rationale? Prudent non-profit hospitals and health systems have already been using conservative reimbursement assumptions in their upcoming budgets.
In November, Fitch analysts said 2013 looked challenging for many others within the healthcare industry, such as for-profit hospitals and medical device companies. Overall, Fitch is forecasting low, single-digit growth for most healthcare companies next year.
More Articles on Fitch Ratings Reports:
Fitch: Outlook Not All Rosy for Hospitals, Providers in 2013
Fitch Downgrades West Penn Bonds to "CCC"
Fitch: Sequestration Cuts Will Put Non-Profit Hospitals in a Bind