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Analyst sees overhaul-driven hospital margin help

Bloomberg BusinessWeek, September 18, 2012

Hospitals stand to gain a meaningful boost to profitability from the healthcare overhaul if President Barack Obama wins a second term this November, according to a Susquehanna Financial Group analyst. Analyst Chris Rigg estimated in a recent research note that profit margins on earnings before income taxes, depreciation and amortization, or EBITDA, will climb more than 2 percent in 2014 for hospital operators Community Health Systems Inc., Tenet Healthcare Corp. and Health Management Associates Inc. WellPoint Inc., the nation's second largest health insurer, said during a recent investor presentation that it expects commercial operating margins from health insurance exchanges to range between 3 percent and 5 percent. Rigg said he used that to help estimate the overhaul's impact on publicly traded hospitals.