I used to work for a THC hospital (two actually), but haven't been back to the old stomping ground for a couple years. I know that Kaiser was way ahead of Tenet facilities, but THC was in the process of "getting productive". Each hospital is run independently but within the framework of the company, so what works for one tends to be implemented at others when money is available. Big projects have to go through red tape to get funding and approval (like adding a medical unit). Some are really state of the art facilities (newer hospitals) and some are behind the times (takeovers). It's been my experience that the older facilities get funding and become productive and money makers. Anything that can't make money is subject to being cut and turned into something else that can make money.
I "think" they are ok. Hospitals can be capex intensive (up to date medical equipment, structural renovations and maintenance and IT equipment), so there is competition for money, but generally what saves money gets funded.
The chart. Well.... it looks like it barely broke the very sharp uptrend on the last sell off and broke the 200 day ema. It hasn't done that since it bottomed in 2000. I guess that should be a warning sign. I thought that maybe a head and shoulders had formed but generally a stock doesn't break down and then move back within the range if it's a true formation. There were some negative divergences on it as well but that has happened in the past and it's just consolidated and then moved up again.
So, for now I'd say it's consolidating. Even if it does break the uptrend line again, as long as it doesn't break below the recent lows of 41, it would just mean it was going sideways for a while and in this market that's pretty good.
No one is going to put THC out of biz unless the government steps in and busts the hospital chains which is probably not in their best interest. (The talk I saw about them wanting to look into the industry was because they thought the hospitals were charging more by eliminating competition, but it's been my experience that they are able to reduce costs by pressuring suppliers/insurance companies which couldn't be done by little independents. Whether they are passing on those savings or not, I don't know. I do know though that nurses at our facilities hadn't had raises since 1992 and got big raises in 2000... when the stock bottomed. Probably they were able to negotiate higher reimbursement, but the nurses were way underpaid and it was quite a problem getting new staff for those wages).
THC otoh, I'm sure has put others out of biz when they couldn't get contracts. Such is life.
If hospitals get reimbursement cut, buy puts on THC and Columbia, because I can almost bet they have to reduce earnings expectations.
TA |
