Hospital stocks impacted by CYH fraud charges

Shares of Community Health Systems (NYSE: CYH) started to bounce back Tuesday, just one day after plunging 36 percent on claims that the Franklin, Tenn.-based hospital chain systematically overbilled Medicare. As the market closed on Tuesday, Community Health had recovered by more than 21 percent, to $31.48.

Tenet (NYSE: THC), which filed the allegations, saw a 14.7 percent drop on Monday and regained nearly 2 percent to close at $6.56 Tuesday.

Although some Wall Street analysts were quick to cut Community Health's ratings in the immediate aftermath of the complaint, several voiced skepticism over Tenet's claims, reports MarketWatch.

The ongoing battle between the two hospital chains also appears to have affected the entire hospital operators sector, as HCA Holdings, Health Management Associates and Universal Health Services all saw drops on Monday.

According to Citigroup analyst Gary Taylor, Tenet's charges may lead to increased regulatory scrutiny of the hospital industry. He warns investors to prepare for potential consequences, notes the AP.

For more:
- read the Associated Press article
- read the MarketWatch article