Fitch Ratings Report: For-Profit Hospitals Well Situated for 2015

For-profit hospitals have benefited from provisions under the Affordable Care Act that boosted patient volume and helped curb bad debt expenses, and they are well situated to handle operational challenges in 2015, according to a report from Fitch Ratings, Modern Healthcare reports.

Specifically, Fitch Ratings analyst Megan Neuburger said for-profit hospitals limited expenses in 2014 and conservatively managed their capital, a trend she expects to continue in 2015.

According to Modern Healthcare, investor-owned hospitals bolstered their credit ratings by only making "small buys" in technology and other adjacent markets in 2014 and focusing on refinancing high-interest debt instead of blockbuster mergers.

Further, the report found that the ACA also helped for-profit hospitals by bolstering patient volume and improving the overall payer mix. According to the report, for-profit hospitals' admissions grew by an average of 0.7% in the third quarter of 2014, or about 3.5% when adjusting for outpatient activity, and are expected to continue to grow in 2015.

Meanwhile, bad debt expense dropped 518 basis points year over year, accounting for about 22% of revenue by the third quarter of 2014 (Kutscher, Modern Healthcare, 1/6).