Health Care Providers - Services - Industry Analysis - a new market research report on companiesandmarkets.com
PR-Inside.com: 2014-03-06 01:13:03
Hospitals are the cornerstone of Medical Services. Government laws mandate that any facility with an emergency room must treat anyone that walks through the door, regardless of insurance coverage or financial standing. Therefore, bad-debt expense is a key factor behind the wide earnings swings a hospital may experience. Specialty hospitals, which do not have emergency rooms, are not subject to such law and focus on accepting well-heeled patients with good insurance plans. These hospitals enjoy fairly predictable revenue streams. Insurers, most of which are Health Maintenance Organizations, are the entities that foot the bill for medical services. Strong underwriting skills are an important determinant of profitability. Clinical laboratories are the final piece of the Medical Services triumvirate. These facilities are the testing centers for diseases and other medical concerns. There are high barriers to entry in this sub-sector, thus competition is limited. Still, the labs are more economically sensitive than hospitals and insurers. In tough times, management may suspend the testing of drugs with a high propensity for abuse. Instead, they will pay attention to more profitable testing for cancer, heart ailments and exotic diseases. Government reimbursements and treatment prices are two factors that need to be monitored by investors. Investing in Medical Services stocks is reflective of a conservative strategy. The sector´s revenue and earnings growth rates are often steady especially when compared to high-tech medical sectors. Medical Services equities are usually viewed as safe plays and, barring any industry-specific concerns, perform a bit better than the broader market averages. Taking care of their health is a top priority for most people and, when ill, they will seek treatment throughout the economic cycle.
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