Fitch: Outlook Not All Rosy for Hospitals, Providers in 2013

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Deficit-reduction measures related to the impending "fiscal cliff" will impact all companies within the healthcare industry, and providers — specifically for-profit hospitals and health systems — may suffer the most if Medicare is chopped as part of the talks, according to Fitch Ratings' 2013 outlook for the U.S. healthcare sector.

If Congress and President Barack Obama cannot agree to a national debt reduction deal before the end of the year, sequestration will follow. Medicare funding will be slashed by 2 percent, and hospitals are estimated to lose more than $11 billion in 2013 alone.

However, Fitch analysts said "an even bigger concern is the potential for reforms to the Medicare and Medicaid programs to reduce the size of the federal deficit," although Democrats in Congress have said they do not support those types of reforms.

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Overall, Fitch is forecasting low, single-digit growth for most healthcare companies next year. The aging population, high rates of chronic disease and growing demand will still help revenue flow at hospitals and other providers as they still deal with the transition from fee-for-service to value-based care, but potential lower payments from Medicare and Medicaid due to the fiscal cliff are a "weak economic condition," according to the report.

Several components of the Patient Protection and Affordable Care Act will impact the industry for the first time in 2013 as well, including value-based purchasing and the Hospital Readmission Reduction program, which went into effect Oct. 1.

More Articles on Fitch Ratings Reports:

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Fitch: Sequestration Cuts Will Put Non-Profit Hospitals in a Bind

49 Statistics on Major For-Profit Hospital Chain Finances

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