The Supreme Court's decision to uphold the individual mandate in the 2010 Affordable Care Act had — as expected — an immediate impact on the shares of Middle Tennessee's hospital operators. Within minutes of the announcement, HCA Holdings, Community Health Systems and LifePoint Hospitals were up 7 percent or more. Only Vanguard Health is lagging.
Other representative local health care names such as Brookdale, Healthways and AmSurg are flat to down.
Larry Robbins, who runs hedge fund firm Glenview Capital, on Wednesday told attendees of a New York conference that he's betting hospitals stocks will get a big lift from health care reform — even if the Supreme Court overturns some of its elements. Glenview manages about $7 billion, but Robbins' pep talk didn't lift local hospital stocks Wednesday.
Investors appear to be getting nervous about the prospects for national health care reform, in full, surviving the U.S. Supreme Court challenge. Even before yesterday's questions that led many observers to say the nation's top judges appear to be leaning toward scrapping the insurance mandate, the price of credit-default swaps on the debt of hospital chains HCA, CHS and others had been rising, write Heather Perlberg and Sridhar Natarajan at Bloomberg.
Swaps on HCA, the biggest issuer in the index, have jumped 45 basis points this month to 501 basis points, according to CMA, which is owned by CME Group Inc. and compiles prices quoted by dealers in the privately negotiated market. The contracts climbed to within 30 basis points of the Markit CDX North America High Yield Index on March 26, the narrowest gap since Oct. 4.
Brentwood money manager Don Hays recently chatted with Matt Nesto at Yahoo! Finance's Breakout blog about how investors should view the Supreme Court's hearing on health care reform. Hays, whose team manages more than $600 million, is very upbeat about the long-term outlook for providers and payers.
"The base is very good for health care stocks with or without this. But it looks like for the very first time, I think, when you get to the end time — maybe a year or two years down the road — you're going to see a much better system in palce for both sides of the aisle."
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