For-profit hospitals’ struggles with declining admissions will be made worse if more states enact work requirements in their Medicaid programs, according to a new report from Fitch Ratings.

CMS Administrator Seema Verma, MPH, has signaled her agency wants to approve work requirements through Medicaid waivers, releasing guidance for such plans and then approving Kentucky’s existing proposal in quick succession earlier this month. Nine other states have considered similar provisions and more could submit waivers now that CMS has outlined its expectations.

On their own, the Fitch report said, work requirements would have only a “modest impact” on hospital revenues considered little of it comes from the lower-margin Medicaid population.

“However, the requirements compound volume pressures buffeting hospitals, which have reported four straight quarters of negative same-facility admissions growth,” the report said. “Driving these declines have been secular challenges such as increasing competitiveness of lower-cost settings, growing consumerism, consolidation among payers and a gradual but constant evolution in the payment environment away from the dominant fee for service model.”

Fitch looked at the revenue which would be at risk for major for-profit chains if Kentucky and seven other states (Arkansas, Arizona, Indiana, Maine, New Hampshire, Utah and Wisconsin) enacted work requirements. It would have the greatest impact on LifePoint and Quorom Health, which have the greatest Medicaid exposure in those states at 17.5 percent and 17 percent of their total beds, respectively.

Overall, the at-risk Medicaid revenues would comprise less than 1 percent of hospitals’ total revenues, having a larger effect on margins. Tenet Healthcare and HCA would be the safest, both having 0.2 percent of their total revenue at risk.

“This is an outer band amount given many existing and potential beneficiaries who are not working could meet the requirements or be exempted from them,” the report said. “Top-line declines can cause larger declines in EBITDA (earnings before interest, taxes, depreciation, and amortization) given fixed operating expenses that are challenging to change in the short run.”