Despite Political Uncertainty, Stable Outlook for U.S. Healthcare

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A new report from Fitch Ratings predicts a low risk of deteriorating fundamentals but high levels of event risk for U.S. healthcare in 2017.

Political and regulatory uncertainty is driving the outlook, according to the report, specifically in regards to the Affordable Care Act (ACA) and drug pricing. The report notes healthcare providers, specifically acute care hospital companies, have the most to lose if President-elect Donald J. Trump guts ACA insurance expansion.

Drug pricing issues include drug manufacturers taking advantage of supply dislocations to increase prices on established products and innovative new drugs being launched with high sticker prices.

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.

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