Investor-owned hospital chains continued to report unexceptional first-quarter earnings this week, but good news from the CMS on 2014 Medicare payments renewed investor confidence in the sector.
The CMS late Friday proposed a 0.8% increase for inpatient prospective payments, totaling an estimated $27 million. It also cut disproportionate share hospital payments only an overall 0.9%.
Both proposals were better than analysts had expected and took the sting out of more earnings reports showing fewer patients seeking care and a more adverse payor mix.
At least one investment bank, UBS, raised its ratings on Tenet Healthcare Corp., Dallas, and LifePoint Hospitals, Brentwood, Tenn.
Hospital stocks had been underperforming the broader market ever since HCA, Nashville, and Health Management Associates, Naples, Fla., previewed disappointing first-quarter results earlier this month.