Healthcare industry in limbo


At long last, the healthcare industry isn't in crisis mode, it's just in a holding pattern. Or at least signs point to this being the case. Maybe the patient isn't healthy, but he's a bit more stable, and that can't be a bad thing.

Pharmas and medical device manufacturers don't seem to be in danger of sliding from profitability to losses, though they're making staff cuts to keep their operations lean. HCA is paying off debt with debt (a lovely move known as payment in kind) because it's in trouble, a prudent move given the market's "dislocation." As questionable as that may sound--and it did to me, when I first read it--I'm beginning to agree with their logic.

Of course, nobody denies that individual hospitals and physicians are struggling, with many making no profit or even in the red. On top of everything else, their access to affordable capital is at an all-time low. But it probably is fair to say that market forces have calmed enough that otherwise stable organizations are no longer in immediate danger.

The reasons for this slightly improved stability are complex, but certainly the resolution of the presidential election counts (markets like certainty) and government intervention in the banking industry to shore up its status hasn't hurt either.

Of course, when president-elect Obama gets into office, who knows what will happen? If nothing else, he appears to be in favor of some extension of mandated health benefits, a move that could have unpredictable effects. In the meantime, however, it seems the industry may be getting just a tiny bit of a break to stop and plan for the next phase. - Anne

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