Health Management Associates Shares Jumped: What You Need to Know

Before you go, we thought you'd like these...
Before you go close icon

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Health Management Associates (NYS: HMA) jumped 11% today as analysts told clients last week's sell-off was overdone.

So what: Both Credit Suisse and Goldman Sachs told their clients today that they thought more stringent prepayment reviews in several states wouldn't have the major impact the market was pricing in. Hospitals have become more stringent about patients meeting coverage criteria, and that will only continue as Medicare and Medicaid look at approvals of cardiac care, spinal fusion, and joint replacements.

Now what: Analysts have their eyes on volumes and denial rates in the short term, which will likely not be greatly affected. But long term, I still think everyone in the health-care industry will be squeezed by a need for Medicare to cut costs. I'm not buying in today because I just don't see this as a rally built on stronger fundamentals for health-care providers.

Interested in more info on Health Management Associates? Add it to your watchlist byclicking here.

At the time this article was published Fool contributor Travis Hoium does not have a position in any company mentioned. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw.Motley Fool newsletter services have recommended buying shares of The Goldman Sachs Group. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 - 2011 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Read Full Story

Want more news like this?

Sign up for Finance Report by AOL and get everything from business news to personal finance tips delivered directly to your inbox daily!

Subscribe to our other newsletters

Emails may offer personalized content or ads. Learn more. You may unsubscribe any time.

From Our Partners