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Fitch Ratings bullish on for-profit healthcare

But uncertain political future for Affordable Care Act could spell trouble.

Photo by Rob Jamieson, via <a href="">flickr</a>.Photo by Rob Jamieson, via flickr.

For-profit hospitals have had a good run recently, and according to credit ratings agency Fitch Ratings that growth is slated to continue … for now.

In a recent report on the sector, Fitch pointed to strong third-quarter growth in patient volumes. Same-hospital admissions were up 0.7 percent and adjusted admissions were up 3.5 percent in the third quarter. The agency said the rebounding economy and management initiatives to increase volume helped, but also pointed to the higher number of insured due to the Affordable Care Act as a big factor.

“Fitch believes the hospital industry may post another two quarters of above-trend growth in volumes as the positive effects of the ACA gain a bit more momentum early in 2015,” the  analysts said.

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The good times, however, might not last. Fitch expects pressures from insurance companies on providers to record fewer short-stay admissions will take a toll, though the agency added that the increased volumes due to the ACA, and the drop in uncompensated care, give reason to be optimistic.

Bad debt in the sector has dropped to 21.5 percent of revenues, Fitch said.

But perhaps the biggest risk for the industry is political. Fitch said it is hard to gauge the future of for-profit healthcare since it’s not known how the new Republican-led Congress will move to dismantle much of President Barack Obama’s banner legislation. For example, the new Congress is expected to gut an employer mandate in the law that requires companies with more than 50 full-time workers to offer affordable healthcare coverage, Mother Jones reported Tuesday. That move could mean 1.5 million Americans lose their health insurance.