OREANDA-NEWS. The rise in registered nurse salaries could pressure some nonprofit hospital and senior living budgets, Fitch Ratings says.

We are beginning to see pressure on wages and greater nurse agency expense in certain markets, particularly for certain specialized services such as ICU and surgical nurses. The pressure on wages is being felt in those metropolitan areas with low unemployment rates, growing populations and numerous healthcare providers. Additionally, we believe wages pressures may affect those providers in more isolated markets with a smaller pool of nurses and nurse assistants.

While the number of registered nurses increased by 11% from 2011-2015, the emphasis on wellness, post-acute services and the growth in outpatient services has increased the overall demand for nurses and nurse assistants at a faster rate.

Fitch expects the demand for nurses to remain high. The American Nurses Association data show that a large number of nurses will retire soon as about one-half are over age 50, reducing supply. At the same time, demand will rise as baby boomers will move into ages that require more healthcare and the use of healthcare extenders, including nurses, continues to grow.

In our view, the effect of the growing competition for nurses and the associated wage, agency and turnover costs is touching certain markets. To date, this growing pressure has had a limited impact on hospital operating performance. However, should these trends continue and increase across the sector, it could have an impact on hospital operating performance and ratings in the long run.

Over the longer term, in addition to wage growth, Fitch expects the sector to face other challenges. Growing healthcare consumerism could lead to lower revenues. The expansion of value-based/risk-based contracting could continue the shift from payors, particularly Medicare, to providers. However, we expect ratings to be stable in the short term as the sector's improving liquidity and leverage positions provide a solid financial cushion to absorb potential operating volatility.