Hospital company stocks fell Monday amid a broader up market on the heels of a new report from Citigroup Global Markets that predicts tough times ahead in 2012 for hospitals and related companies reliant on government spending.

Citigroup analysts predict a long bear market in government entitlement spending, which could hurt Medicare and Medicaid spending more than anticipated. Under the heading of “what would concern us most,” the authors speculated that Republican control of the Senate could have an extremely negative effect on publicly traded hospital companies given the pounding they took during the debt-ceiling fight this past summer.

Based on the findings in the 111-page report, Citigroup downgraded four companies to a neutral stance from buy—HCA, Health Management Associates, LifePoint Hospitals and Universal Health Services. And the financial firm recommended that investors sell shares of Tenet Healthcare Corp., which Citigroup considers to be the worst positioned of acute-care publicly traded chains. Community Health Systems' rating was unchanged at neutral. HCA's share price fell 1.77%, HMA fell 1.63%, LifePoint fell 2.31%, UHS fell 2.96% Tenet fell 3.31% and Community Health fell 1.32%. The Dow Jones industrial average rose 1.47%.

Also downgraded to sell status were other companies viewed to be the worst performers in their respective sub-sectors: Lincare Holdings, which fell 3.5%; AMN Healthcare, which fell 4.97%; and Sun Healthcare Group, which fell 3.35%.

Citigroup analysts are keeping a buy rating on only two companies it tracks in the hospital sector, both of which are physician practice companies—Mednax and TeamHealth—and are viewed to have a low reimbursement risk from physicians, strong balance sheets and ample acquisition opportunities. Mednax's stock price fell 1.85% and TeamHealth rose 1.95%.