Moody's Investors Service predicted a stable outlook for U.S. for-profit hospitals and the global pharmaceutical industry in 2020 and a positive outlook for the medical device sector.
Moody's expects the global pharmaceutical industry to see earnings before interest, tax, depreciation and amortization growth of 2.5 percent to 3.5 percent in 2020, largely driven by the burgeoning oncology therapy market.
In addition, U.S. for-profit hospitals will also see EBITA growth of about 3 percent to 4 percent in 2020. Reimbursement rate increases from private insurers and government payers, coupled with cost-cutting initiatives and divestitures of underperforming assets, will support the revenue growth.
However, Moody's warns that rising labor costs and the movement of patients to lower-cost settings will pressure margins for the for-profit hospitals.
The U.S. medical products and device industry can expect to see EBITA growth of 5 percent to 6 percent in 2020, Moody's said.
"Demand for healthcare products and services will rise globally in 2020, fueled by aging populations in mature markets and better access to healthcare in emerging ones," said Jessica Gladstone, a Moody's associate managing director. "Nevertheless, payers will seek to control their healthcare spending and continue to focus on cost-effectiveness, while regulatory and legislative changes could lower demand or prices."
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