Barclays on Health Care Facilities: Feinstein's Weekly Insights & Observations
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2 Buy, 10 Hold, 0 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 8 | Down: 5 | New: 26
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Barclays on Health Care Facilities: Feinstein's Weekly Insights & Observations
Barclays analyst, Adam Feinstein, said, "Health care facilities underperformed the S&P 500 and the NASDAQ last week. The group was down 6.6% for the week, versus a 4.7% decrease in the S&P 500 and a
5.1% decrease in the NASDAQ."
"Sequestration Is a Good Near-Term Outcome, Although Some Long-Term
Uncertainty Will Continue - We believe the 2% sequestration cut is a good near-term outcome for hospitals. Prior to sequestration, we estimate that hospitals will receive a rate increase of 2.5%-3.0% in 2013, so even with the with the 2% sequestration cut, we estimate that hospitals will still receive a 0.5%-1.0% rate increase in 2013. We believe this is a manageable outcome given our view that hospitals should be able to find a way to restrain their cost growth to this level. We highlight that the next area of focus around Medicare reimbursement is the upcoming doc fix which Congress will likely pass sometime over the next month in order to avoid a 27.4% cut in Medicare reimbursement for physicians on January 1."
Update on Arizona Medicaid
"CMS recently approved pending Medicaid cuts in the state of Arizona. As a
reminder, providers were scheduled to receive a 5% cut to Medicaid rates on
October 1, 2011. However, this cut had not yet been approved by CMS. This
announcement confirms that the 5% cut will indeed go into affect (retroactive to October 1, 2011). The rate cut follows another 5% reduction which went into effect on April 1, 2011."
"We note that Vanguard Health Systems (NYSE: VHS) has a significant portion of its revenue coming from the state of Arizona. However, we note that VHS has disclosed that the additional 5% cut on October 1, 2011 is already included in the company's guidance for its 2012 fiscal year."
Barclays analyst, Adam Feinstein, said, "Health care facilities underperformed the S&P 500 and the NASDAQ last week. The group was down 6.6% for the week, versus a 4.7% decrease in the S&P 500 and a
5.1% decrease in the NASDAQ."
"Sequestration Is a Good Near-Term Outcome, Although Some Long-Term
Uncertainty Will Continue - We believe the 2% sequestration cut is a good near-term outcome for hospitals. Prior to sequestration, we estimate that hospitals will receive a rate increase of 2.5%-3.0% in 2013, so even with the with the 2% sequestration cut, we estimate that hospitals will still receive a 0.5%-1.0% rate increase in 2013. We believe this is a manageable outcome given our view that hospitals should be able to find a way to restrain their cost growth to this level. We highlight that the next area of focus around Medicare reimbursement is the upcoming doc fix which Congress will likely pass sometime over the next month in order to avoid a 27.4% cut in Medicare reimbursement for physicians on January 1."
Update on Arizona Medicaid
"CMS recently approved pending Medicaid cuts in the state of Arizona. As a
reminder, providers were scheduled to receive a 5% cut to Medicaid rates on
October 1, 2011. However, this cut had not yet been approved by CMS. This
announcement confirms that the 5% cut will indeed go into affect (retroactive to October 1, 2011). The rate cut follows another 5% reduction which went into effect on April 1, 2011."
"We note that Vanguard Health Systems (NYSE: VHS) has a significant portion of its revenue coming from the state of Arizona. However, we note that VHS has disclosed that the additional 5% cut on October 1, 2011 is already included in the company's guidance for its 2012 fiscal year."
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