Market research firm Wall Street Equity Research has released a report suggesting that while the hospital sector remains healthy, it faces several pressures including the move toward ambulatory care and accountable care organizations, according to a news release.
The report, which examined the financials of publicly-traded Community Health Systems and Universal Health Services, found that while the hospital sector was one of the few industries to maintain steady job growth during the recession, this growth could bring challenges such as the increasing presence of unions. "The wage increases associated with unionization could drastically hurt the revenue streams of hospitals such as Community Health Systems Inc., which are already faced with an industry where wages are increasing faster than inflation," according to the report.
Additionally, the report identified the increasing popularity of urgent care clinics, ambulatory services and surgery centers as another threat to hospitals. However, the report notes that fortunately for the hospital sector, the new healthcare reform law should inhibit the creation of physician-owned entities, meaning market share could return to the hospital sector.
Another issue facing the sector identified by the report is the potential price effects of ACOs, which are designed to increase efficiency by bringing together physician and hospital operations. According to the report, "this combination could prove to further increase prices in a sector that is showing a continuing trend of consolidation."
Read the Wall Street Equity Research release on the hospital sector.
Read more coverage on the hospital sector:
- S&P Reports Find Non-Profit Hospitals' Finances Improved in 2009
The report, which examined the financials of publicly-traded Community Health Systems and Universal Health Services, found that while the hospital sector was one of the few industries to maintain steady job growth during the recession, this growth could bring challenges such as the increasing presence of unions. "The wage increases associated with unionization could drastically hurt the revenue streams of hospitals such as Community Health Systems Inc., which are already faced with an industry where wages are increasing faster than inflation," according to the report.
Additionally, the report identified the increasing popularity of urgent care clinics, ambulatory services and surgery centers as another threat to hospitals. However, the report notes that fortunately for the hospital sector, the new healthcare reform law should inhibit the creation of physician-owned entities, meaning market share could return to the hospital sector.
Another issue facing the sector identified by the report is the potential price effects of ACOs, which are designed to increase efficiency by bringing together physician and hospital operations. According to the report, "this combination could prove to further increase prices in a sector that is showing a continuing trend of consolidation."
Read the Wall Street Equity Research release on the hospital sector.
Read more coverage on the hospital sector:
- S&P Reports Find Non-Profit Hospitals' Finances Improved in 2009