Health-care sector gets pain from all sides

Community Health's Phoenixville Hospital in Phoenixville, Pa.
Bradley C. Bower | Bloomberg | Getty Images

While headlines are dominated by the debate over drug pricing and biotechnology business models, the real issue for the health-care industry may be that overall business is simply slowing.

Even though the market rallied 1.7 percent Thursday, the health-care select sector SPDR fund ETF sold off 0.6 percent due to Community Health Systems, a large U.S. hospital chain, providing a negative earnings pre-announcement.

Community Health Systems closed down 35 percent on Thursday, hitting other companies such as fellow hospital firm HCA Holdings down 7 percent, and even health insurance stocks like Humana, down 7 percent, and UnitedHealth Group down 4 percent.

The health-care select sector SPDR fund ETF is down 12 percent from its August high, while the S&P 500 was off 2 percent in the same period. The sector is also now underperforming the market for the year, down 0.7 percent versus the index down 0.3 percent.

Here's why the health-care sector sentiment may have turned lower on Thursday off the hospital company's numbers: