Donald Trump's election win prompted even more bullishness in a stock market that was already up significantly for the year. For healthcare investors, though, it represented yet another reason to dump some stock. Trump's appointment of industry skeptics like Robert F. Kennedy Jr., alongside broader expectations of a Republican crackdown on programs like Medicaid and Obamacare, has prompted a selloff in everything from hospitals to pharmaceuticals, health insurers and biotech.
The election jitters exacerbated what had already been a tough period for the industry. In 2023, healthcare underperformed the S&P 500 by about 22 percentage points, so many believed that 2024 would be a bounce-back year. Instead, history repeated itself, with yet another 20-percentage-point underperformance for healthcare. That created a valuation gap that looks like a historic aberration: The Health Care Select Sector ETF is trading at a more than 20% discount to the S&P 500 based on their forward earnings multiples, far larger than the average 5% discount seen over the past two decades, according to FactSet.
The market bearishness is partly due to financial fundamentals. At a time when the U.S. economy is on solid footing and tech companies are riding high on the AI frenzy, most healthcare subsectors seem to be caught in a negative earnings-revision cycle, writes Asad Haider, a healthcare equity strategist at Goldman Sachs. The reasons are idiosyncratic. For health insurers, it was due to higher-than-expected postpandemic costs as people returned in droves to hospitals and doctors. For pharma, some of the profitability issues have stemmed from higher acquisition-related charges as the industry seeks to make up for low growth with dealmaking. But the bottom line is that in a red-hot market, healthcare simply isn’t where investors want to be. Since the start of 2023, Goldman data shows healthcare with the second-biggest outflows among S&P 500 sector ETFs, behind energy.
Massachusetts State Auditor Diana DiZoglio's office says there is a "direct correlation" between inaction by the state's Center for Health Information and Analysis and the closing of hospitals. The routine audit of the agency, founded by the legislature in 2012 and known as CHIA, covered the two-year period ending June 30, 2023. The auditor's office adds, the agency failed to collect financial information or assess up to $1.6 million in fines.
A new plan for Pasadena-based for-profit healthcare firm Tenor Health Partners to take over operations at Sharon Regional Medical Center represents a desperately needed reprieve for the struggling facility. But hospital workers, along with community members and leaders, should be under no illusions: Yet another out-of-town management firm is unlikely to be a long-term solution for the facility.
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Sources say Sharon Regional Medical Center's Emergency Room closed at 7 a.m. on Sunday, and for a few hours, there were no emergency services available at the hospitals serving the Sharon area. The closure comes one day ahead of the original Jan. 6 closure deadline. Posted on the doors of the hospital is a note stating it is closed and that the nearest hospital is UMPC Horizon Shenengo Campus. Frank Jannetti, director of Public Safety for Mercer County, said Sharon Regional is now on diversion, meaning it is no longer accepting patients into its emergency room. Sources say there are no longer any patients at Sharon Regional. The final psychiatric patients were removed last week. The hospital also did no "elective" surgeries last week.