Octus on Credit: 2025 may be marked by increased stability for large care providers but policy uncertainty looms; industry focused on addressing claim denials

Kyle Owusu, Director of Credit Research

The increased stability that large well-capitalized care providers began experiencing in the latter half of 2023 should continue through fiscal year 2025.

We envision low to mid-single digit volume and rate growth, as well as stable EBITDA margins across the care providers. In calendar year 2025 and beyond performance should be driven more by macroeconomic factors such as GDP growth and unemployment and less by the ability to manage cost spikes amidst rebounding patient volumes after covid.

Companies have successfully reduced contract labor expenses by focusing on retention and recruitment, to the detriment of the healthcare staffing companies such as AMN Healthcare, Ingenovis and Medical Solutions.

A lot can change though, especially with calls to reduce the Committee on Energy and Commerce’s deficit by at least $880 billion for fiscal years 2025 through 2034. The Energy and Commerce Committee oversees Medicare and Medicaid.

If there are tariffs related to medical equipment and supplies, distributors and manufacturers may seek to pass cost increases to health systems, resulting in greater supply costs for acute care providers. 

Separately, the industry remains laser focused on addressing increased prior authorization and claim denials, presenting potential opportunities for revenue cycle management companies such as Waystar.

Join us at our upcoming webinar on Feb. 26, as we discuss how investors, advisors and stakeholders should understand these dynamics, as well as others.

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