Bloomberg News

HCA Gains as Hospitals Expect More Patients: Atlanta Mover

January 31, 2012

Jan. 24 (Bloomberg) -- HCA Holdings Inc., the largest hospital company by revenue, led the industry in gains as executives at device and insurance companies predicted more people will start using hospital care.

In earnings calls, executives at companies including Johnson & Johnson, Quest Diagnostics Inc. and UnitedHealth Group Inc. predicted that more people will be choosing elective medical procedures such as hip replacement surgery they avoided as U.S. employment hovered above 9 percent in 2011.

HCA, based in Nashville, Tennessee, gained 5.8 percent to $26.06 at 4 p.m. New York time. The eight biggest hospital companies, including Community Health Systems Inc. and Tenet Healthcare Corp., gained.

“You can only put these procedures off for so long,” William Weldon, chief executive officer of J&J, the world’s second-biggest seller of health-care products after Pfizer Inc., said today on an earnings call. “I think the procedures are going to be coming back, and I think we need to invest there.”

Hospitals reduced costs to make up for the loss of revenue as people avoided doctors’ visits. At the same time, the system is facing reimbursement cuts from taxpayer-supported health plans and new mandates from the U.S. health-care law signed in 2010. The overhaul will trim $157 billion in U.S. payments to hospitals through 2019, according to estimates by the Congressional Budget Office.

“If you can get more positive volume growth in a higher fixed-costs business, that’s good,” said Tom Gallucci, an analyst with Lazard Capital Markets in New York. “People are getting more hopeful after these comments.”

UnitedHealth, the largest U.S. health insurer by sales, predicted last week that increased use of medical care would hurt its earnings in 2012. Robert Hagemann, chief financial officer of Madison, New Jersey-based Quest, said there are “signs that things may be starting to improve or at least stabilize” in health-care use.

--Editors: Andrew Pollack, John Lear

To contact the reporter on this story: Sarah Frier in New York at sfrier1@bloomberg.net;

To contact the editor responsible for this story: Reg Gale at rgale5@bloomberg.net


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