Fitch: For-Profit Hospital Earnings Likely to Remain Weak

Although the for-profit hospital industry is on the precipice of positive shifts, Fitch Ratings is not optimistic that 2014 first-quarter earnings from the chains will show much improvement from last year.

According to a Fitch report, the big six chains — Hospital Corporation of America in Nashville, Tenn., Community Health Systems in Franklin, Tenn., Tenet Healthcare Corp. in Dallas, LifePoint Hospitals in Brentwood, Tenn., Universal Health Services in King of Prussia, Pa., and IASIS Healthcare in Franklin, Tenn. — generally posted weak growth in inpatient volumes last year. In the fourth quarter of 2013, those companies recorded a cumulative 4.7 percent drop in admissions — the biggest decline since 2011.

For-profit hospitals do have some trends working in their favor: The Patient Protection and Affordable Care Act's health insurance exchanges exceeded expectations by enrolling more than 7 million Americans. Hospitals have also been benefiting from a higher acuity patient mix, which has helped improve net revenue per adjusted admission.

However, Fitch said those developments have to be taken with a grain of salt because "the actual influence of the insurance expansion on hospital industry operating trends is far from certain, since the effects of narrow networks, employer dumping and incremental utilization by the previously uninsured are still unknowns."

In fiscal year 2013, the big six chains posted more than $71.6 billion in revenue. HCA represented almost half of that total. Including revenue from Naples, Fla.-based Health Management Associates, which was bought out by CHS this year, the big for-profit hospital players recorded more than $77 billion in revenue in 2013.

More Articles on Hospital Earnings:
7 Major For-Profit Hospital Companies Post $562M in Quarterly Earnings
Mayo Clinic's Operating Profit Soars to $612M in 2013
Tenet Healthcare Posts Net Losses in 2013 After Vanguard Purchase

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