--Senate panel finds home-health care firms gamed Medicare
--Panel charged that Amedisys, LHC Group, Gentiva provided medically unnecessary patient care
--Company documents indicated therapists were encouraged to target most profitable number of visits, even when not needed
By Russ Britt
A Senate panel's finding that home-health care firms gamed the Medicare system took a bite out of not only shares in the sector, but all hospital companies in Monday trades.
The allegations from the Senate Committee on Finance charge that Amedisys Inc. (AMED), LHC Group Inc. (LHCG) and Gentiva Health Services Inc. (GTIV) provided medically unnecessary patient care. The panel conducted the probe on allegations first reported in The Wall Street Journal.
The Senate probe says company documents indicated that therapists were "encouraged to target the most profitable number of therapy visits, even when patient need may not have required such visits."
Gentiva was hardest hit, plummeting 33% to $3.68. Amedisys plunged 9.6% to $13.40, while LHC tumbled by 8.3% to $15.64.
The Journal reported in its online editions that Amedisys was "disappointed" in the findings, and representatives for Gentiva and LHC said they had cooperated with the probe.
But the findings had a ripple effect throughout the industry on a day when the markets were suffering. Kindred Healthcare (KND) dropped 11% to $7.68, and Tenet Healthcare (THC) lost 13% to $3.59.
Others feeling the pain included LifePoint Hospitals (LPNT), down 8.7% to $33.44, Health Management Associates Inc. (HMA), falling 8.7% to $6.32 and Community Health Systems Inc. (CYH), which lost 8.1% to $15.29.
A report over the weekend in Barron's that questioned the accounting principles at the hospital industry's biggest player, HCA Holdings Inc. (HCA), hit that company's shares, but not to the same degree as the others. HCA closed down 6.7% to $18.81.
But the Senate probe's effects may have spread to insurers, virtually all of which were down more than 5% and some were off by more than 7%.
Molina Healthcare Inc. (MOH), a big player in Medicare, fell 7.7% to $14.26. Centene Corp. (CNC) fell 7.4% to $26.54 while industry giant UnitedHealth Group Inc. (UNH) lost 6.9% to $42.92.
-Russ Britt; 415-439-6400; AskNewswires@dowjones.com