Hospital stocks fall after talk of health bill revival

By Lewis Krauskopf

NEW YORK (Reuters) - Shares of U.S. hospital operators dropped on Tuesday as Republicans sought to revive plans to dismantle the Affordable Care Act that has benefited the companies.

Shares of HCA Holdings (NYSE: HCA), the largest publicly traded hospital operator, fell 3.2 percent, while Tenet Healthcare (NYSE: THC) was off 4.8 percent and Community Health Systems (NYSE: CYH) dropped 6.3 percent.

Top White House officials met moderate and conservative Republicans in the U.S. House of Representatives on Monday in an effort to revive a plan to repeal and replace the 2010 health law, commonly called Obamacare.

Perhaps tempering pressure on the stocks, House Speaker Paul Ryan said on Tuesday that Republican lawmakers are having productive talks on a new healthcare reform bill, but it was too soon to say if and when a new proposal would be put forth.

Hospital stocks surged late last month after House Republicans pulled their health bill when it appeared the legislation lacked enough support. But the stocks have now given up much of those gains.

Investors have been concerned that a healthcare overhaul will curtail benefits the hospitals have gained from expanded insurance coverage under Obamacare.

In the options market, puts on Community Health, Tenet and HCA traded at a faster-than-usual pace on Tuesday, as traders sought protection against declines in the shares, according to data from options analytics firm Trade Alert.

Put options convey the right to sell shares at a fixed price in the future.

Shares of Medicaid-focused health insurers also fell on Tuesday, with Centene (NYSE: CNC) down 2.1 percent and Molina Healthcare (NYSE: MOH) down 2.4 percent.

Those stocks have been pressured by Republicans' plan to roll back an expansion of the Medicaid health program for low-income Americans.

(Additional reprting by Saqib Iqbal Ahmed; Editing by Nick Zieminski)

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