The Changing World Of Obamacare
Cecil is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Obamacare favors big hospitals. Big Hospital was one of the powerful lobbies, along with Big Pharma and Big Insurance that supported Obamacare to become a law. Big Hospital lobbied hard for Obamacare's insurance mandate and for steering more business to big institutions.
President Barack Obama's re-election means his overhaul of the U.S. health-care system, opposed by most Republicans, will move ahead in all 50 states, with or without the cooperation of their governors. Under Obamacare, the pool of paying hospital patients will increase. It is estimated that currently about 30 million Americans are uninsured. The increase in the number of paying patients is expected to be huge.
By current law, hospitals have to serve all patients who show up at their emergency rooms including those with no insurance. Hospitals also have difficulty collecting from low income Americans who may have no insurance or are under insured. Some hospitals are not able to collect as much as 30% of their billings. The earnings of some hospitals may increase by as much as 25%.
So let's take a look at three companies who might benefit from Obamacare.
HCA Holdings (NYSE: HCA) is a non-governmental hospital operator in the United States and an integrated provider of health care and related services. Approximately 4 percent to 5 percent of all inpatient care delivered in the country today is provided by HCA's 163 hospitals. HCA Holdings last announced its earnings results on Thursday, November 1. The company reported $0.78 earnings per share (EPS) for the quarter, missing the consensus estimate of $0.90 by $0.12. The company had revenue of $8.06 billion for the quarter, compared to the consensus estimate of $8.04 billion. The company’s revenue for the quarter was up 11.1% on a year-over-year basis. On average, analysts predict that HCA Holdings will post $3.67 earnings per share for the current fiscal year.
Health Management Associates
HMA operates 66 hospitals with a total of 10,330 licensed beds in 15 states. Health Management Associates (NYSE: HMA) along with its subsidiaries, operate general acute care hospitals in non-urban communities. Health Management Associates has a 52 week low of $4.81 and a 52 week high of $8.69. The company has a market cap of $2.110 billion and a P/E ratio of 14.36. Health Management Associates last announced its earnings results on Monday, October 22nd. The company reported $0.18 earnings per share (EPS) for the quarter, missing the consensus estimate of $0.20 by $0.02. The company's revenue for the quarter was up 19.0% on a year-over-year basis. On average, analysts predict that Health Management Associates will post $0.82 earnings per share for the current fiscal year.
LPNT operates 54 hospital campuses in 18 states, having a total of 6,048 licensed beds. LifePoint Hospitals (NASDAQ: LPNT), through its subsidiaries, operates general acute care hospitals in non-urban communities in the United States. Lifepoint Hospitals last issued its quarterly earnings data on Friday, October 26th. The company reported $0.39 earnings per share for the quarter, missing the analysts’ consensus estimate of $0.76 by $0.37. The company had revenue of $820.20 million for the quarter, compared to the consensus estimate of $814.52 million. The company’s revenue for the quarter was up 11.0% on a year-over-year basis. Analysts expect that Lifepoint Hospitals will post $3.29 EPS for the current fiscal year.
In recent years, healthcare innovation has moved away from hospitals to smaller, less bureaucratic outpatient clinics. For example, most patients who need long-term dialysis no longer get it in hospitals but go to less costly, more convenient outpatient clinics. However, Obamacare and its implementation may seem to tip the scales back in favor of large hospitals. While there are still some challenges to its implementation, especially with regards to figuring out how to juggle the budget so as not to tip the fiscal deficit, it is fairly obvious that Obamacare will be implemented and in that case, these companies are sure to benefit.
ceciljohn2002 has no positions in the stocks mentioned above. The Motley Fool has no positions in the stocks mentioned above. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!