ACA complications, elections cloud for-profit hospital outlook

Uncertainty about the Affordable Care Act'sinsurance exchanges and presidential campaign politics could affect markets for the for-profit hospital sector in the year ahead, Fitch Ratings said in a new report.

“After surviving myriad political and legal battles, the ACA now faces a long period of logistical difficulties in implementation,” Fitch analysts wrote. That includes state holdouts on Medicaid expansion, including Florida and Texas, and questions about insurers' willingness to market health plans in ACA exchanges, said Megan Neuburger, a managing director with the ratings agency.

“It's just such a big, complicated piece of legislation that's now this living, breathing thing,” Neuberger said.

Insurer UnitedHealth Group said it may exit the exchanges after reporting 2015 losses in the market. For hospitals, that could be a signal that “future growth in exchange volumes may be tepid,” Fitch stated.

At the same time, headlines from the presidential campaign could roil equity markets in the coming year, and that could influence hospital operators' capital priorities, Fitch said.

Hospitals benefited from the reform law's insurance expansion, with more demand and less uncompensated care, although it is unclear how other factors, such as the economic recovery, may have contributed to stronger bottom lines, Neuberger said.

Those gains may have started to taper late last year, but volume is not expected to slump as much as it did following the recession, she said.

Melanie Evans

Melanie Evans writes about healthcare finance, hospital management and governance issues. She has been part of the Modern Healthcare staff since 2004. Earlier in her career she covered healthcare and not-for-profits as a reporter at the Duluth (Minn.) News Tribune. She received a bachelor's degree in international relations from Boston University and a bachelor's in journalism from the University of Minnesota.

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