HOSPITALS | Outlook Is Worrisome

Good Luck to You I just read the following article posted by Dr. David Posnett today and I am re-posting by permission. At the end I have some brief comments.  – John Tepper Marlin, CityEconomist Short Hospital Stocks! by D. Posnett MD   East Hampton, N.Y., October 10, 2017– I have been waiting for this. Wall street charts show that investors are jittery about hospital stocks.  Here is why:

(1) Investors are approaching hospital stocks cautiously. Les Masterson said earlier today:

Some unfavorable financial trends and an air of uncertainty for healthcare’s future has led to an environment not particularly friendly for major investment… as hospitals continue to struggle with fewer inpatient admissions, lower reimbursements and potential increases in uncompensated care, investors are growing wary.

The current environment caused disappointing second quarters and lower earnings projections for major for-profit systems like HCA, Community Health Systems (CHS) and Tenet Healthcare…. The results led stock prices to tumble.

I would go further and add two more disturbing facts:

(2) Hospital Sector Slides. The Financial Times notes that US hospital operators' stock prices are sliding down  following a report that President Donald Trump will sign an executive order this week to withdraw some insurance requirements laid out under Obamacare. Tenet Healthcare, Community Health Systems, Surgery Partners, HCA Healthcare, DaVita shares tumbled lost up to 10% in stock prices.

(3) Some are suggesting "Checking in on the Canadian Healthcare Stocks".

My Comment (CityEconomist)

It's not just the stock market. If hospitals are heading into lean times, then one of the engines of job growth since 2009 will be knocked out. 

Even during the recession before that, the health care industry was growing jobs steadily. When this juggernaut goes into reverse... watch out, America.