LHC Headed for Sick Ward
Due to potential Medicare cuts, home health care chains could start landing in the sick ward as early as next year.
Chains including LHC (LHCG), Amedisys (AMED) and Gentiva (GTIV) have found themselves operating under a cloud of uncertainty due to sweeping reimbursement changes proposed by the Centers for Medicare and Medicaid Services. And those changes, if implemented as planned in January, could prove far worse than some people imagine and ultimately shake up the entire industry.
"There is no guarantee that any of these companies can mitigate the changes successfully," warns Sheryl Skolnick, senior vice president of CRT Capital Group. And "if the companies don't mitigate successfully, the cuts to the most profitable segment of their home health business becomes the crucial element of any investment decision and analysis going forward."
So far, many experts have focused on CMS' broad proposal while waiting for more specific details. On the surface, the proposal looks relatively manageable, promising a slight increase in home health care payments overall.But CMS plans to slash payments for those cases that currently rank as the industry's most profitable. Right now, Skolnick calculates, companies collect about $2,500 for making nine home health care calls -- a figure that jumps to $4,500 following the 10th visit. Under the proposed changes, Skolnick estimates, that juicy bonus payment could shrink by nearly 65%.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV