WebMD Health Corp. (WBMD), Community Health Systems (CYH), Health Management Associates Inc (HMA): Three Reasons Americans’ Health-Care Spending Is Slowing

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Better quality doesn’t always lead immediately to lower costs in every case. However, as former CMS Administrator Dr. Mark McClellan noted in recent testimony before Congress, focusing on quality of care for each person is the “fundamental strategy for addressing health-care cost growth.”

Investing angle
There are several ways that investors can profit from these trends. For example, if consumers gain increasingly more control over how they spend their health-care dollars, they will need solid information to make decisions.

WebMD Health Corp. (NASDAQ:WBMD) ranks as one of the most well-known and trusted sources of health information for consumers. The online health information provider went through tough times in 2011 and 2012 as big pharmaceutical companies cut back on advertising. However, WebMD Health Corp. (NASDAQ:WBMD) seems to have turned the corner, with shares more than doubling so far this year.

As readmissions drop, that could hurt hospitals’ bottom lines — unless overall admissions increase. Several major hospitals have reported weak admissions rates in 2013. They’re counting on a higher number of insured patients with implementation of the Affordable Care Act’s individual mandate to help address the problem.

Hospital chain Community Health Systems (NYSE:CYH) should benefit if the positives expected from the ACA are realized. The stock is up nearly 30% this year. Community Health Systems (NYSE:CYH) recently announced a buyout of Health Management Associates Inc (NYSE:HMA) as part of its plans to better take advantage of health reform. This merger should give the chain more leverage in price negotiations.

EHR vendors could present a good way to play the quality-improvement angle. While several of these stocks are trading at a premium, McKesson Corporation (NYSE:MCK) doesn’t look very expensive. Part of the reason is that much of its business stems from its medical supplies business, which isn’t as exciting as technology. However, while the company’s technology division only accounts for 3% of McKesson Corporation (NYSE:MCK)’s total sales, it makes up more than 20% of earnings.

The article 3 Reasons Americans’ Health-Care Spending Is Slowing originally appeared on Fool.com and is written by Keith Speights.

Fool contributor Keith Speights has no position in any stocks mentioned. The Motley Fool recommends McKesson.

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