Avondale Partners analyst Kevin Campbell says it's looking more and more like the volume weakness experienced by many hospital chains in the first quarter was more seasonal than structural. April's traffic was better, he says, and shares of locals HCA, CHS, LifePoint and Vanguard should continue to trend higher as investors remain focused on the expected benefits of health reform next year and beyond. Other factors helping: Pricing for the insurance exchanges being set up looks to be solid, and Medicare disproportionate-share payment cuts won't be as bad as expected.
Shares of HCA (Ticker: HCA) are starting the week on a sour note — down 3 percent at 11:30 a.m. — while the stocks of CHS, LifePoint and Vanguard all are up slightly.
Hospitals that treat Medicaid-eligible poor and uninsured patients are asking the federal government to delay $64 billion in cuts to the program while, ironically, at the same time Medicaid rolls are expanding.
The American Hospital Association wants a two-year delay as reductions of 50 percent, or $14.1 billion, are planned from fiscal 2014 through 2019. This according to draft regulations to be published in the Federal Register, as reported Tuesday by Bloomberg.
The Medicaid expansion will place an even greater financial burden on hospitals especially those heavily reliant generally on government reimbursement.
More than a dozen state governors — all Republicans — have balked at the process, choosing not to participate with the federal government to build their own insurance exchanges. These exchanges are designed to provide affordable health insurance to an estimated 34 to 44 million Americans currently without it.
Two of Nashville's publicly traded hospital chains got thumbs up from analysts Tuesday. Ralph Giacobbe at Credit Suisse said Community Health Systems' cost controls will serve it well in the coming quarter and hiked his price target to $55. Over at Deutsche, Darren Lehrich lifted his price target to $51 from $48. CHS shares (Ticker: CYH) closed Tuesday trading up about 1 percent at $45.57 after the company reported its Q1 numbers late Monday.
LifePoint Hospitals also got a little more love in the wake of its profit report late last week. Joe France at Cantor Fitzgerald hiked his price target to $45 from $40, but maintained his 'hold' rating. LifePoint's stock (Ticker: LPNT) ended Tuesday at $48 on the nose.
Analyst Kevin Campbell at Avondale Partners says a number of factors are aligning in a positive way for LifePoint Hospitals, which reported its first-quarter earnings last week. Between cost controls, M&A opportunities, IT incentive payments and a decent outlook for the pricing of health insurance exchanges, Campbell reiterated his 'market outperform' rating and raised his price target to $56 from $54.
Credit Suisse analyst Ralph Giacobbe has bumped his target to $48 for similar reasons. And Giacobbe peers Kevin Fishbeck at Bank of America Merrill Lynch and A.J. Rice at UBS have both bumped LifePoint to 'buy' from 'neutral.'
Shares of LifePoint (Ticker: LPNT) were up more than 6 percent in mid-day trading to about $48.30.
Despite upping its bid from $138.7 million to $200 million at the last minute, Duke LifePoint has lost out on the rights to run a Florida hospital for the next 40 years.
The Post reported last week about a bidding war over Munroe Regional Medical Center between Duke LifePoint, a joint venture of Duke University and Brentwood-based LifePoint Hospitals, and Florida-based Health Management Associates.
Late last week, the hospital’s board of trustees voted 6-1 in favor of HMA’s bid. One trustee told the Star Banner, Ocala’s daily newspaper, that he voted for the HMA deal because the company had a stronger footprint in the Sunshine State. The trustee said he was afraid Duke LifePoint would pay more attention to hospitals in states, such as North Carolina, where it oversees more facilities.
HMA also sweetened the pot at the last minute with an offer to invest $1.5 million in the Ocala community.
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