Although for-profit operators face headwinds, Moody’s said several factors will help drive higher earnings growth in the sector, including same-facility net revenue growth and benefits from cost-cutting initiatives.
Moody’s also expects company-specific actions to offset industry challenges. For example, Franklin, Tenn.-based Community Health Systems and Brentwood, Tenn.-based Quorum Health have both divested several negative- or low-margin hospitals, which will help stabilize profitability, according to Moody’s.
The credit rating agency expects Dallas-based Tenet Healthcare to continue to benefit from a significant restructuring program that is forecasted to lift Tenet’s EBITDA margins by more than 150 basis points in 2018. LifePoint is expected to benefit from merger-related synergies over the next 12 to 18 months due to its proposed combination with Brentwood-based RCCH HealthCare Partners.
Moody’s expects aggregate same-facility EBITDA to grow 3.5 to 4 percent over the next 12 to 18 months, versus a 2 to 3 percent forecast six months ago.
More articles on healthcare finance:
Louisiana hospital files for bankruptcy, blames ex-administrator for financial crisis
HCA to close Sister Emmanuel Hospital in Miami
Billionaire pledges to fight pharma’s ‘abusive’ pricing
At the Becker's 11th Annual IT + Revenue Cycle Conference: The Future of AI & Digital Health, taking place September 14–17 in Chicago, healthcare executives and digital leaders from across the country will come together to explore how AI, interoperability, cybersecurity, and revenue cycle innovation are transforming care delivery, strengthening financial performance, and driving the next era of digital health. Apply for complimentary registration now.