Legislative and hurricane winds buffet hospital stocks
Hospital stocks were hit Wednesday by a pair of looming storms: Hurricane Irma in the Atlantic and the continued healthcare debate in Congress.
Sen. John McCain (R-Ariz.) on Wednesday said he supported the concept of an Obamacare repeal-and-replace bill, which made investors of hospital stocks and managed-care companies a little jittery, said Mizuho Securities healthcare analyst Sheryl Skolnick in a note to investors Wednesday.
Republicans are trying to get an Obamacare fix in place by Sept. 30, so that the party can use budget reconciliation to pass it with 51 votes in the Senate instead of the 60 votes needed in the regular legislative process to beat a Democrat filibuster, Skolnick said.
The bill proposed by Sens. Lindsey Graham (R-S.C.) and Bill Cassidy (R-La.) calls for a $500 billion block grant to the states to replace the Affordable Care Act exchanges and mandated insurance for Americans.
"We suspect that this is what is pressuring the MCOs and hospitals today," Skolnick wrote.
Although initial reports suggested McCain endorsed the Graham-Cassidy bill, the Arizona senator later clarified that he would need to see final legislation and understand its impact on his state before he took a position.
The Modern Healthcare Hospital Stock Index, a basket of nine hospital company stocks, was down less than 1% Wednesday while the benchmark S&P 500 Index was flat.
Some investors may also be jittery as Hurricane Irma threatens southern Florida this weekend. The Category 5 hurricane has led Florida officials to evacuate the Keys and warn hospitals to prepare for the worst. The impact of Hurricane Harvey on Texas hospitals is still fresh on people's minds.
Community Health Systems' stock dropped by 38 cents, or 5% on Wednesday. The hospital giant has 21 hospitals in Florida located mostly on the west side of the state and some in central Florida. Those hospitals generate about 12% of company revenue.
Nashville-based HCA, whose stock dipped 1% Wednesday to $77.28, has 46 hospitals across Florida, including several in the Miami area.
Tenet Healthcare, with 10 hospitals in the Miami area, saw its shares decline 3%, or 53 cents, to close at $17.15.
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