Moody's maintains stable outlook on for-profit hospital sector

Moody's Investors Service has maintained its stable outlook on the U.S. for-profit hospital sector, as it expects slightly higher patient volumes to help grow same-facility revenue over the next 12 to 18 months.

"The stable outlook for the U.S. for-profit hospital industry reflects our expectations for same-facility EBITDA growth of 2 percent to 3 percent over the next year or so," said Jessica Gladstone, a Moody's senior vice president. "This will come predominantly from revenue growth, fueled by modest reimbursement increases and slightly positive volume growth, though profitability margins will remain relatively flat."

Earnings growth this year will also be supported by the severe flu season in early 2018. Hospitals' cost-cutting efforts and renegotiation of services and supply contracts will offset ongoing margin pressures, according to Ms. Gladstone.

Although patient volumes are expected to rise about 1 percent over the next 12 to 18 months, for-profit hospitals will continue to face increasing competition from lower cost urgent care settings, according to Moody's.

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