The pace of healthcare mergers and acquisitions will pick up as the healthcare reform law gives for-profit hospitals and health systems greater incentive to grow and diversify, analysts at Moody's Investors Service said this week.
“As hospital operators prepare for the implementation of the broader reaching aspects of healthcare reform, acquisition activity is likely to continue, in some cases driving up leverage and requiring considerable integration efforts,” said Moody's analysts who follow the nation's for-profit hospital operators in a report released this week.
Leverage may increase as hospital operators borrow against expected future revenue from patients newly insured under the Patient Protection and Affordable Care Act, analysts said. More attractive margins as a result of fewer unpaid bills because of fewer uninsured patients could “prompt them to lever up in the near term to complete acquisitions,” the Moody's report said.