With universal healthcare coverage high on the national agenda, Standard & Poor’s (S&P) Ratings Services credit analysts warned investors of the pitfalls and potential of three major segments of the healthcare industry should universal coverage come to pass. At S&P’s Health Care Hot Topics Conference, “Politics and Leverage May Be Hazardous to Your Health,” held Oct. 22, analysts said the impact of any reforms on corporate ratings in those industries would take some time to become clear. Further discussion can be found in the Oct. 24, 2007, special issue of CreditWeek.
Pharmaceutical companies would be especially vulnerable to regulatory changes down the road, because some proposed reforms would increase the government’s power to negotiate drug prices. That would not necessarily be an issue in the short term, but longer term, it could prove troublesome, said one analyst. Also, the uncertainty of a new federal healthcare paradigm could hurt many other companies that heavily depend on government reimbursements, because the size and scope of these cannot be known until any proposals are enacted. For companies with already weak financials, any cut in government reimbursements--most likely undertaken to reduce the nation’s overall health bill--could result in lowered ratings. For more information, call (212) 438-6634.
