Healthcare News

Fitch downgrades TeamHealth as ER volumes, pricing face pressure

This audio is auto-generated. Please let us know if you have feedback.

Dive Brief:

  • Fitch Ratings downgraded its long-term rating for TeamHealth as the physician staffing firm is expected to face continued pressure on emergency room volumes and pricing.
  • The credit ratings firm also removed its positive outlook for TeamHealth as it expects the company’s earnings before interest, taxes and depreciation to decline by nearly 30% for the first nine months of this year compared to the prior-year period.
  • In its Monday downgrade, Fitch also raised concerns about TeamHealth’s high debt leverage elevating its near-term risk of default.

Dive Insight:

Physician staffing companies like TeamHealth are continuing to see softer volumes in the emergency room at the same time they’re facing pricing pressure.

TeamHealth staffs healthcare facilties nationwide and is among the bigger players in the sector, along with Envision. Revenue from staffing ERs represents the majority of TeamHealth’s revenue from contracted physician services, according to Fitch.

The COVID-19 pandemic has shaken up utilization trends, especially in ERs, where volumes are still depressed, Fitch said.

At the same time, insurers are working to keep patients out of the typically high-cost setting of the emergency room, steering them to alternative settings like urgent care centers.

The ban on surprise billing is also leading health insurers to put downward pressure on in-network prices in an effort to ensure lower out-of-network payments during arbitrated payment disputes outlined in the federal legislation, Fitch said.

These volume and pricing trends serve as a headwind for TeamHealth. The credit ratings firm said it expects TeamHealth’s topline growth to be in the mid-single digits through 2025.

TeamHealth remains out-of-network with the nation’s largest commercial insurer, UnitedHealthcare, Fitch said. TeamHealth filed suit against United earlier this year over allegations it denied payments for emergency services.

Source link