The value of for-profit hospital stocks rests in the hands of the U.S. Supreme Court, the Chicago Sun Times reported.
Hospital stocks could take a big hit if the high court throws out the entire Patient Protection and Affordable Care Act. Such a ruling could drive down shares by up to 10 percent, according to a report issued Friday by financial services firm Robert W. Baird & Co., the Sun Times noted.
But if the Supreme Court upholds the legislation, hospital stocks will likely jump 10 percent for for-profit chains like Pennsylvania-based Universal Health Services or Dallas-based Tenet Healthcare, thanks to the expected influx of newly insured patients under the ACA, according to the report.
Some long-term investors haven't been deterred by the looming high-court decision and started buying publicly traded hospital chains, expecting patient visits to rebound as the economy improves, Baby Boomers retire and the unemployed find jobs.
"The stocks have been incredibly cheap while the Supreme Court decision is discouraging people from becoming investors," Jessica Bemer, a Snow Capital Management analyst, which owns shares of Community Health and Health Management Associates, told MSN Money. "Community Health and HMA are getting the cream of the crop and getting good prices," she said.
Meanwhile, a report earlier this month from Moody's Investors Service warned that a full or partial repeal of the health reform law will hurt for-profit hospitals as they will face increased exposure to bad-debt and reduced reimbursements. In addition, hospitals will face market uncertainty with government cost-control activity, FierceHealthFinance reported.