For-profit revenue rises despite admissions dip: Fitch

Weak patient volume continued to plague for-profit systems in the second quarter of the year, and the challenging operating environment is expected to persist, according to a report from Fitch Ratings (PDF).

The report found that investor-owned chains experienced a 2.7% decline in admissions, with adjusted admissions, a figure that includes outpatient activity, growing slightly at 0.5%.

In addition, Fitch noted that high unemployment rates, growing numbers of uninsured patients and federal and state reimbursement pressures will continue to challenge hospital profitability.

However, the news wasn’t all dismal. The report found that among its rated for-profit hospitals, same-facility net revenue actually increased 3.7%. Moreover, Fitch said it does not expect to downgrade any ratings in the second half of the year because systems still have adequate cash reserves and the ability to pay their maturing debt.

Recent acquisitions have given systems a significant boost in earnings before interest, taxes, depreciation and amortization, but Fitch did not expect to see significant debt pay-downs among its rated companies. It also cautioned that the industry’s ability to generate cash could be constrained by the weak operating environment, and that cash on hand may need to be deployed toward capital expenditures—such as upgrading acquired hospitals or deferred maintenance on existing facilities.