HCA's Revival Is for Real

There's little doubt that the Clinton health care fiasco and accusations that HCA(HCA Quote) submitted fraudulent Medicare and Medicaid claims placed the health care services company squarely in the doghouse. The stock has essentially been dead money for the past five years. But the times, they are a-changin'. In fact, the company has paid out more than $800 million to settle most of the fraud charges. And based on what I've seen, the worst-case scenario appears to have already been factored into the share price.

For those unaware, strong patient volume and favorable demographics have enabled HCA to experience some pretty terrific growth in the first nine months of fiscal 2001 (revenue was up 7.3% over the same period a year earlier, while earnings per share, net of charges, were up 18.3%). In addition, management has been aggressively cutting costs by doing such things as limiting the growth in supply costs and speeding up its debt collection process. These efforts have transformed HCA into a darn solid company. ...