The for-profit healthcare sector outlook is stable, but companies are under growing pressure to prove their value or risk becoming a political target, Fitch Ratings said in a new report.
At particular risk are companies that operate hospitals, manufacture pharmaceuticals and medical devices or distribute drugs, analysts said.
“Fitch believes it is increasingly critical for companies to articulate a value proposition and demonstrate success executing on that vision to avoid becoming a target of political scrutiny and pressure from payers.”
The rating agency raised its rating outlook for the for-profit healthcare sector to stable from negative, but debate over healthcare in the coming presidential election is a risk to that upgrade, the report said.
Hospitals have a strong case to make for value, analysts said. These companies can influence spending and savings. However, hospital operators also face risk as they adopt new business strategies.
Pharmaceuticals face pressure from payers and consumers and will likely target research and development to drugs “where the defensibility of value is clear.”
But drug distributors and pharmacy benefit managers have “no shortage of opportunity” to better manage costs and are “well-positioned in the value debate.”
Meanwhile, medical device and supply companies face pressure from insurance company consolidation and from the acquisition of physicians by hospitals.
Overall, the for-profit sector outlook is stable with projected growth of 3.3% thanks to the economy and more insured Americans.