For-profit and nonprofit hospitals will face a number of challenges and opportunities in 2015, according to Moody's Investors Service's Healthcare Quarterly.
Hospitals will benefit from the Patient Protection and Affordable Care Act this year as the health reform law will lead to hospitals seeing a greater number of insured patients, according to Moody's.
However, not all hospitals will benefit from the PPACA the same this year. Geographically diverse for-profit hospital operators, such as Nashville, Tenn.-based Hospital Corporation of America, Franklin, Tenn.-based Community Health Systems and Dallas-based Tenet Healthcare, will benefit greatly from the PPACA this year. Additionally, the PPACA will benefit nonprofit hospitals "in states that have aggressively expanded insurance coverage," according to Moody's.
Although seeing a greater number of insured patients is seen as a credit positive, patient volume growth will be weak this year, which is a credit negative. A number of factors will contribute to the weak patient volume growth, including the growing popularity of high-deductible health plans and regulatory and reimbursement changes, according to Moody's.
Continuing consolidation in the healthcare industry in 2015 could be a credit positive or a credit negative for hospitals. Mergers and acquisitions are credit negative for the acquiring health systems. However, if a struggling hospital joins a larger, stronger system it could be seen as a credit positive, according to Moody's.
Moody's anticipates "that the larger for-profit operators, including HCA, Tenet and Community, will continue to look for targets that fill out existing markets to provide opportunities to enter new markets" in 2015.
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