Hospital stocks dropped Tuesday morning, after reports that House Republicans are discussing ways to revive their Obamacare repeal and replacement bill.
Just one day earlier, many hospital-related stocks ended in green territory, rallying on the news that the GOP's health-care proposal was yanked from consideration. The industry has largely opposed the Republicans' plan because it was expected to increase the number of Americans without health insurance, which could have raised hospital losses.
Shares of hospital owner Community Health Systems dropped more than 7 percent at one point Tuesday, while Tenet Healthcare was down 5 percent in early afternoon trading. The stocks closed the day down 4 and 1 percent, respectively.
HCA Holdings, one of the nation's largest hospital operators, closed down around 1 percent, after reaching a fresh multiyear high Monday. The health-care sector of the S&P 500 ended up closing Tuesday in green territory, after being down a little less than 1 percent in afternoon trading, with HCA being one of the group's biggest losers for the day.
Aside from the potential revival of the Republicans' health-care bill, hospital-related companies are also at risk because of innovation and shrinking margins, one analyst has said.
"Volumes in hospital land have been coming down," Mizuho's Sheryl Skolnick warned Monday on CNBC's "Closing Bell." And even with the Affordable Care Act, or Obamacare, remaining intact, hospital stocks such as Tenet and its peers could start to drop, she said.
Because of innovation, many doctors are now making decisions for their patients based on data and analytics, Skolnick said — a conversation that can happen over technology. An innovation-driven shift is resulting in slowing growth rates through the front doors of many hospitals, and even fewer emergency rooms visits, she explained.
"That could spell a problem for the part of [a hospital's] business, where you've deployed the most capital, and that's the outpatient hospital bed."
Tenet Healthcare 5-day performance
Source: FactSet