Fitch:US Healthcare Outlook Stable Despite Political Uncertainty
https://www.fitchratings.com/site/re/890582
A low risk of deteriorating fundamentals but high levels of event risk driven by political and regulatory uncertainty are driving the outlook for the US healthcare sector in 2017, according to Fitch Ratings. Healthcare is facing some specific issues under a Trump administration, including the future of the ACA. And debate around drug pricing will become a longer term issue despite the current focus on the ACA.
Uncertainty and turmoil have been persistent throughout the ACA's nearly seven-year history, and the industry is in for more of the same in 2017. However, segments of the healthcare industry benefiting from the ACA will lobby hard to keep the insurance expansion in place. Healthcare providers, specifically acute care hospital companies, have the most to lose if the ACA insurance expansion is gutted because it has resulted in more paying customers for the sector.
About 20 million Americans have health insurance under the ACA, including roughly 10 million through expanded state
Whatever healthcare policy is ultimately pursued by the Trump administration, development of the healthcare value ecosystem will continue in 2017 as patients and insurers seek ways to reduce spending. Consumers are struggling to bear an increasing share of healthcare costs in light of growth in insurance products like high deductible health plans. During 2016, headlines about the growing financial burden of pharmaceutical products highlighted this issue.
There are two separate issues involved in the drug pricing debate: drug manufacturers taking advantage of supply dislocations to increase prices on established products, and truly innovative new drugs being launched with high sticker prices. While not illegal, the former is not a defensible business model in the long term. The latter is an entirely different issue. Unless there is a significant regulatory change that limits the pricing power of drug companies, drugs that truly provide a superior benefit in terms of efficacy and quality of life improvements will continue to command pricing power.
Heading into 2017, innovative pharma pipelines are full of cutting edge new therapies, and pricing debates on launch will echo those of the hepatitis C and cholesterol-lowering PCSK-9 drugs. At the same time, generic and specialty pharmaceutical companies are taking a hit on the generic pricing issue.
Ultimately, fundamentals in healthcare are solid relative to some other corporate sectors, and Fitch forecasts mid-single digit organic EBITDA growth for most healthcare companies in 2017. Still, headline risk will be a persistent backdrop.
Additional information is available on www.fitchratings.com.
The above article originally appeared as a post on the Fitch Wire credit market commentary page. The original article can be accessed at www.fitchratings.com. All opinions expressed are those of Fitch Ratings.
ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTPS://WWW.FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEB SITE AT WWW.FITCHRATINGS.COM. PUBLISHED RATINGS, CRITERIA, AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE, AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE CODE OF CONDUCT SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.
Copyright (c) 2016 by Fitch Ratings, Inc.,
The information in this report is provided "as is" without any representation or warranty of any kind, and Fitch does not represent or warrant that the report or any of its contents will meet any of the requirements of a recipient of the report. A Fitch rating is an opinion as to the creditworthiness of a security. This opinion and reports made by Fitch are based on established criteria and methodologies that Fitch is continuously evaluating and updating. Therefore, ratings and reports are the collective work product of Fitch and no individual, or group of individuals, is solely responsible for a rating or a report. The rating does not address the risk of loss due to risks other than credit risk, unless such risk is specifically mentioned. Fitch is not engaged in the offer or sale of any security. All Fitch reports have shared authorship. Individuals identified in a Fitch report were involved in, but are not solely responsible for, the opinions stated therein. The individuals are named for contact purposes only. A report providing a Fitch rating is neither a prospectus nor a substitute for the information assembled, verified and presented to investors by the issuer and its agents in connection with the sale of the securities. Ratings may be changed or withdrawn at any time for any reason in the sole discretion of Fitch. Fitch does not provide investment advice of any sort. Ratings are not a recommendation to buy, sell, or hold any security. Ratings do not comment on the adequacy of market price, the suitability of any security for a particular investor, or the tax-exempt nature or taxability of payments made in respect to any security. Fitch receives fees from issuers, insurers, guarantors, other obligors, and underwriters for rating securities. Such fees generally vary from
For
View source version on businesswire.com: http://www.businesswire.com/news/home/20161206005918/en/
Fitch Ratings
Managing Director, Corporates
+1 212 908-0501
Fitch Ratings
or
+1 212 908-9123
or
Media Relations:
[email protected]
Source: Fitch Ratings
Norwich officials approve new firefighters union contract
In The GOP Push To Repeal And Replace, The Easy Part Is Over
Advisor News
Annuity News
Health/Employee Benefits News
Life Insurance News