Fitch: Drop in hospital admissions caused by 'systemic shift'

Report highlights challenges facing for-profit hospital industry

Hospital patient volumes are continuing to decline as the economy recovers, which suggests that the United States is undergoing "systemic shifts in care delivery," according to Fitch Ratings.

In a new report, Fitch analysts reviewed for-profit hospital performance for the first three months of 2013. Among the hospital operators included in the study, admissions declined an average of 3.8% during the first quarter compared to the same period the year prior. However, the report attributed up to half of the drop to an early Easter and last year's Leap Day.

Separately, Fitch noted an ongoing slowdown in health care costs, which have skimmed tens of billions of dollars off of Medicare's spending projections.

Factors underlying slow growth

Fitch Senior Director Megan Neuburger attributed the gradual decline in hospital admissions to several factors, including:

  • Patients are increasingly paying for a larger portion of their medical bills;
  • Federal policies aimed at curbing hospital readmissions, which have prompted some hospitals to classify more patients under observation status rather than admitting them as inpatients;
  • Increasing pressure from private insurers to treat patients in low-cost settings; and
  • A shift away from fee-for-service payments toward risk-based contracting (Evans, Modern Healthcare, 6/27 [subscription required]).

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