Health Management Associates Inc (HMA), Community Health Systems (CYH): Ready for Obamacare, Hospital Chains Join Forces

Rival HCA buys hospitals in Florida

HCA Holdings Inc (NYSE:HCA), or Hospital Corporation of America, which operates about 163 hospitals and 109 freestanding surgery centers, had initially shown interest in acquiring Health Management Associates Inc (NYSE:HMA). Instead the company has purchased from IASIS Healthcare three hospitals located in the Tampa Bay, Florida area. The hospitals will join HCA’s West Florida division and add 691 beds. With the purchase, the West Florida division expands to 19 hospitals and 16 ambulatory surgery centers and should attract patients located in Tampa Bay and St. Petersburg.

HCA Holdings Inc (NYSE:HCA)’s results in the second quarter were better than its competitors with revenue of $8.45 billion, up 4.2% from $8.11 billion in the second quarter of 2012. Second quarter net income per diluted share came in at $0.91 compared to $0.85 in 2012. The hospital operator’s same facility admissions for the quarter increased 1.3% and same facility equivalent admissions rose 1.1%.

My Foolish conclusion

The three companies mentioned have approximate five-year growth rates between 10% and 12%. With the changes expected next year and brought on by the Affordable Care Act, it may be wise to sit on the sidelines and watch how these companies navigate through this new regulatory environment. It will also be interesting to see the outcomes and resolution of the legal matters affecting CHS and Health Management Associates Inc (NYSE:HMA). The hospital chains that achieve positive results may warrant a purchase near the second half of 2014.

Eileen Rojas has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

The article Ready for Obamacare, Hospital Chains Join Forces originally appeared on Fool.com.

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