The stocks of publicly traded healthcare companies fell with the volatile market last week, some just dipping below the surface and others hitting rock bottom.
The Dow Jones industrial average plunged 7.2%, or 554.26 points, to 7161.15-the largest point decline ever-on Oct. 27.
That was the 12th-largest percentage slide, and it caused trading to be stopped twice. The NASDAQ index fell a record 7.42%, or 113.27 points, to 1,537.84.
While Oxford Health Plans became the poster child for hard-hit healthcare companies (See story, below), other companies didn't fare too well, either:
HealthSouth Corp., a Birmingham, Ala.-based rehabilitation company, saw its stock drop 12.9%, or $3.44 per share, to $23.25.
The stock of Tenet Healthcare Corp., a Santa Barbara, Calif.-based hospital chain, sank 9.6%, or $3 per share, to close at $28.25 per share.
Columbia/HCA Healthcare Corp., a Nashville-based hospital company, saw its stock price slide 6.5%, or $1.88 per share, to $27.
The next day, however, the market bounced back with the Dow Jones industrial average climbing 4.7%, or 337.17 points to 7,498.32, the largest point gain and trading day ever.
Some healthcare companies followed suit; others kept slipping.
For example, the stock prices of HealthSouth, Tenet and Columbia jumped 10.8%, 9.9% and 3.7%, respectively, the day after the crash.
David Risinger, a healthcare analyst with New York-based Morgan Stanley Dean Witter Discover, said publicly traded managed-care companies took the worst hit in last week's downslide.
Morgan Stanley's Health Care Payer Index, an equal-dollar weighted index of 12 healthcare management companies, dropped 14%, or $39.87, to a low of $245.65 on Oct. 27. It regained 4.5% the next day to close at $256.70.
Morgan Stanley's two other healthcare indexes also dropped, but not as much.
Its Health Care Product index declined 7.9%, or $40.57, to $474.58 on Oct. 27 but gained 5.4% to close at $550.52 the next day. And its Healthcare Provider Index dropped 6%, or $24.61, to $374.05 on Oct. 27 but jumped 5% to $394.13 the next day.
Risinger said healthcare stocks fell victim to the market's swings last week like companies in all industries.
But Risinger and healthcare analyst John Runningen, of Atlanta-based Cordova Capital, agreed that merger and acquisition activity in the healthcare sector won't slow down because of what happened last week. They pointed to PhyCor's proposed acquisition of competing physician practice management company MedPartners as an example (See story, p. 4).
"Certainly the market has an impact on healthcare pricings, but that's not going to change corporate strategies," Risinger said.