Hospital Stocks Rise Amid Broader Slump

By Melanie Evans

U.S. hospital stocks rose Monday amid a broader market downturn as investors welcomed the stalling of White House efforts to overturn the Affordable Care Act.

Monday's climb in hospital stocks continues a rally that began last week, as the Trump administration and House Republicans failed to win support for a bill to dismantle the ACA. House Speaker Paul Ryan on Friday canceled a vote on the legislation, conceding it lacked enough Republican backing.

Hospitals benefited from more paying patients under the Affordable Care Act, most notably in states that expanded Medicaid. The House Republican bill, the American Health Care Act, would have slashed federal Medicaid funding, leaving some states to rollback expansion, a Congressional Budget Office said.

Shares in HCA Holdings Inc., the largest publicly traded hospital company, were up 4.9% Monday afternoon from the market's close Friday. Rural hospital operator LifePoint Health Inc. stock was up 1.61% Monday from Friday's close. Tenet Healthcare Corp. and Community Health Systems Inc. shares rose by 1.12% and 0.94%, respectively.

Hospital stocks' ascent contrasts with a broader market slump as investors grow anxious over the prospects for the Trump administration's other ambitious policy goals, such as tax reform. The S&P 500 and Dow Jones Industrial Average were down 0.23% and 0.29%, respectively, Monday afternoon. The Nasdaq Composite rebounded by mid-Monday afternoon.

"We had significant concerns about the loss of [insurance] coverage," under the House GOP plan, said Shannan Murphy, a health care analyst with S&P Global Ratings.

But hospitals continue to face uncertainty after Republicans' failed health policy push, analysts said. The next steps for Republican health policy are unclear, said David Peknay, also a health care analyst with S&P Global Ratings.

Republicans' setback also leaves in place the Affordable Care Act's struggling health insurance exchanges, where low-income consumers can purchase subsidized health plans. Some health insurers have exited the markets, leaving fewer choices for consumers. Without more options, some consumers may decide to forgo insurance in 2018, said Megan Neuburger, a health care analyst with Fitch Ratings, Inc.

Write to Melanie Evans at Melanie.Evans@wsj.com

(END) Dow Jones Newswires

March 27, 2017 15:29 ET (19:29 GMT)

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