Is the Affordable Care Act (ACA)-related shine on for-profit hospital stocks beginning to wear thin?
That appears to be the consensus on Wall Street, where publicly-traded hospital stocks were hit hard last week due to a spike in uninsured patients at one company, Investor's Business Daily has reported.
That was related in part to the recent earnings report of HCA Holdings, which operates more than 160 hospitals in 20 states. Although the company actually reported better-than-expected numbers, it disclosed that its volume of uninsured patients was up 8.7 percent in the second quarter of the year compared to the second quarter of 2014.
HCA stock dropped by more than 2 percent after it released its second quarter earnings report, even as it beat its forecast numbers. Other major for-profit hospital operators, such as Tenet Healthcare Corp., Community Health Systems and LifePoint, fell more than 4 percent. None of those companies' stocks had regained their losses as of early this week.
"There's a sense that the benefits of healthcare reform could be leveling off, that it's not going to be a tailwind as much anymore," an unidentified stock analyst told Investor's Business Daily. And other observers said they expected the relatively high admissions numbers to taper off later this year.
That position is up for debate, however. Motley Fool reported earlier this month that the for-profit hospitals could reap benefits for the long term. "The benefits from an increasingly insured population are likely to continue supporting results at all three operators, especially now that the Supreme Court has ended worries over an ending of ACA insurance subsidies for millions of people," the publication said.
The for-profit chains have definitely benefited from the ACA, as both the newly insured from the state exchanges and the expansion of Medicaid eligibility in 30 states have helped bring more insured patients in their doors. Altogether, uncompensated care dropped by nearly $6 billion, although the large majority of those savings are in states that expanded Medicaid. Some chains have even hedged their bets, with Tenet creating a program specifically targeted at enrolling patients in insurance programs.
To learn more:
- read the Investor's Business Daily article
- check out the Motley Fool article