Hospital stocks rise; insurers take hit

Hospital stocks reacted with optimism to the news that President Barack Obama had won a second term—as the fate of the healthcare reform law becomes even more certain.

Companies like HCA, Nashville; Community Health Systems, Brentwood, Tenn.; and Tenet Healthcare Corp., Dallas opened Wednesday with clear gains even as the broader market showed less ebullience.

The Dow Jones Industrial Index and the Standard & Poor's 500 were trading down about 1.9% in the first hour after the trading bell sounded, and closed the day down about 2.4%. Questions about how Obama would handle the looming fiscal cliff as well as ongoing concerns about the European markets led to the sell-off.

Healthcare stocks on the whole were registering a loss of about 1.4%, with health insurers taking the brunt of the hit.

The investor reaction was similar to the aftermath of the U.S. Supreme Court decision on the Patient Protection and Affordable Care Act, when the law was upheld almost in its entirety.

At the time, analysts said investors were betting on larger patient volumes for healthcare providers while also pricing in risk to insurers from the individual mandate, which requires them to cover even the sickest patients.

As closing bell sounded, HCA and Tenet were trading up 9.5%, Community Health, about 6%, and Vanguard Health Systems, Nashville, 5.3%.

In contrast, Humana, Louisville, Ky., was showing a loss of 7.9%; WellPoint, Indianapolis, 5.5%; and Aetna, Hartford, Conn., 4.2%.

Once again, though, shares of Medicaid-focused managed care organizations such as Molina Healthcare, Long Beach, Calif., which was trading up 4.6%, reflected more optimism for that sector.

Shares of post-acute-care providers, meanwhile, reacted more negatively than they did in the aftermath of the court decision. Kindred, Louisville, fell 4.4% while LHC Group, also Louisville, fell 3.2%, and Almost Family, Lafayette, La., 4.2%. Amedisys, Baton Rouge, La., was trading down 7% at the close.