Despite last week's official entry into a government shutdown, for-profit hospital stocks soared through the roof.
Wall Street's positive trading likely resulted from the opening of the healthcare law's insurance exchanges, which went live last Tuesday despite the shutdown. Financial analysts have long predicted for-profit hospital companies will be among the major beneficiaries of the exchanges, as their bad debt would turn into commercially insured payments almost overnight. Last year, a financial analyst with Susquehanna Financial Group said EBITDA at for-profit hospital operators could increase more than 2 percent in 2014 due to the extended coverage provisions under the Patient Protection and Affordable Care Act.
Dallas-based Tenet Healthcare Corp. recorded the largest gains last week. Its shares skyrocketed more than 14 percent to $46.10. In conjunction with the exchanges, Tenet officially closed its acquisition of Nashville, Tenn.-based Vanguard Health Systems in a deal valued at $4.3 billion. In the process, Vanguard ceased trading on the New York Stock Exchange.
Tenet President and CEO Trevor Fetter, who believes hospitals can extract commercial rates on the exchanges, said the Vanguard deal has "significantly increased" the company's scale and market share.
Other major winners from last week included Nashville, Tenn.-based Hospital Corp. of America and Franklin, Tenn.-based Community Health Systems — the two largest for-profit hospital companies — with each gaining more than 9.5 percent.
Here are the five-day stock prices and percentage changes for the week of Sept. 30 through Oct. 4.
• Community Health Systems (Franklin, Tenn.): $43.92 per share (up 9.53 percent)
• Health Management Associates (Naples, Fla.): $13.00 per share (up 3.17 percent)
• Hospital Corp. of America (Nashville, Tenn.): $46.10 per share (up 9.58 percent)
• LifePoint Hospitals (Brentwood, Tenn.): $48.14 per share (up 4.77 percent)
• Tenet Healthcare Corp. (Dallas): $46.10 per share (up 14.31 percent)
• Universal Health Services (King of Prussia, Pa.): $77.66 per share (up 4.54 percent)
More Articles on For-Profit Hospitals:
Tenet Closes on $4.3B Vanguard Acquisition
Despite Profit in FY 2013, SunLink Health Systems Teeters on Financial Edge
Capella Healthcare Working With Private Equity Firm to "Evaluate" Options