AHCA could spur negative credit implications for some healthcare entities, Fitch says

House Republicans' proposed American Health Care Act would increase uncertainty in the medium term and possibly negatively influence some healthcare entities' access to and expense of capital, according to Fitch Ratings.

The agency noted the Congressional Budget Office has not yet given its formal score for the AHCA, and it is unknown in detail how the proposal will affect the number of insured Americans. Therefore, there is not clarity as far as the medium-term consequences of the proposal, Fitch said.

Still, "increasing uncertainty can have meaningful credit implications," the agency wrote. "Healthcare providers' capital deployment priorities may change when return expectations for capital investments have a wider range of possible outcomes. Similarly, refinancing debt maturities likely becomes more difficult as regulatory uncertainty persists, which is noteworthy given the number of lower rated healthcare providers with debt maturities between 2018 and 2020."

But Fitch said it has not changed its stable long-term outlook for healthcare. The agency still expects healthcare entities to see increased volume due to a rising demand from baby boomers, and for Medicare and Medicaid, as well as commercial payers, to focus on managing absolute costs. Fitch said it also expects healthcare entities to continue the shift to value-based care.

"Providers in particular will increasingly need to demonstrate value, grow share within core markets and coordinate care across settings through some combination of consolidation, vertical integration and partnering with other systems," the agency wrote.

 

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