Fitch: Healthcare profit margins will face pressure in 2019

Despite a stable outlook on the healthcare sector for 2019, Fitch Ratings expects healthcare pricing and profit margins to be under pressure next year, according to the rating agency's 2019 Outlook Report.

"Most disruptive threats to healthcare business models boil down to an attack on pricing power, including outside industry competitive upstarts, government price setting and consumer and employer efforts to force lower pricing," said Megan Neuburger, managing director at Fitch. "Of all of these, the government policy aspect poses the greatest threat since it is the farthest reaching. That said, we think that radical changes to the current system are unlikely."

Fitch said credit rating downgrades outweighed upgrades during 2018, and that pattern is likely to continue next year.

The rating agency highlighted several other trends to watch in 2019, including the ongoing political debate around access to and affordability of care, regulatory efforts to curtail growth in drug pricing, and litigation surrounding the healthcare industry's role in the opioid epidemic.

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