CHICAGO — The rise in high-deductible health plans could bring more pressure to bear on an already pressured non-profit health care sector, Fitch Ratings said in a report Wednesday.
High-deductible plans, defined by the Internal Revenue Service as having an annual deductible not less than $1,250 for an individual or $2,500 for family coverage, have grown steadily in popularity among employers. The percentage of employers offering the plans grew to 31% in 2011 from 4% in 2005, according to Fitch.
The Affordable Care Act, which took effect in January, is expected to encourage the trend as the state health care exchanges feature a mix of plans, many of which offer lower monthly premiums in exchange for higher deductibles.
For non-profit health care providers already struggling with various challenges, the growth of the plans could strain volumes, said Fitch. Like Moody's Investors Service and Standard & Poor's, Fitch maintains a negative outlook on the sector.
"We're concerned in the near term that, with what we think of as the rapid adoption of these plans, there's going to be some catch up and it could create some margin pressure in the sector, which we think is negative for ratings," said Fitch analyst Jim LeBuhn. "Does that mean there's going to be a lot of downgrades? No, but there will be some overall pressure within the sector."
High-deductible plans can contribute to lower inpatient volumes for many providers, as patients think twice about taking on massive hospital bills. Volumes are a key metric for providers' bottom lines, and high-deductible plans are one in a series of trends in the sector leading to softer volumes, LeBuhn said.
The high-deductible plans could also help spark a larger shift toward a more well-informed patient who shops around and asks about pricing for medical services. The ability of providers to adapt to changing patient behavior will be key, Fitch said.
"In the post-Affordable Care Act marketplace, Fitch believes the willingness and ability of management teams to affect a cultural change and transform their organizations into consumer-driven enterprises that can articulate a compelling value proposition (value versus price) will be critical to maintaining financial viability," the ratings firm says in the report.
On the capital spending side, most hospitals remain in a wait-and-see mode as the new law takes effect and are holding back from large projects, LeBuhn said.
"I think a lot of organizations are not looking to spend a lot in terms of bricks and motors," he said. "They're pulling back on capital spending, and a benefit of that is they're building up their liquidity positions for the uncertainty that they see."
