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S&P Equity Research Publishes Semi-Annual Healthcare Facilities Industry Survey

Thursday, June 3, 2010 General News J E 4
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NEW YORK, June 2 While Standard & Poor's Equity Research Services expects the passage of healthcare reform to be positive for hospitals after 2014, in the near-term they see margin pressure as rate cuts and givebacks are implemented before the uninsured obtain coverage, thus limiting the industry's ability to reduce bad debt. These and other findings are available in a semi-annual report on the healthcare facilities sub- industry published by Standard & Poor's.

"We anticipate that operating trends at most hospital companies will remain fairly negative in 2010, but could improve modestly if the recession ends during the year," said Jeffrey Englander, Healthcare Facilities Analyst at Standard & Poor's Equity Research. "Increasingly, we see the stocks in the industry being affected by company-specific concerns and expect them to trade more on fundamentals in their individual markets than as an industry. While we see it as a positive that the anxiety over healthcare reform has been lifted, we expect investors to be disappointed near term as industry conditions remain challenging."

Englander adds that as the cost of hospital care continues to outpace the overall inflation rate and the cost of healthcare delivery gains increased attention, containing and reducing costs remain an industry priority. "Although the Medicare pricing outlook currently appears favorable, federal and state budget problems and federal cost-cutting could pressure both Medicare and Medicaid reimbursement in the future," said Englander.

Englander thinks the growing use of information technology by the healthcare facilities sub-industry is a key trend that needs to be watched closely. "For virtually all healthcare companies, information technology has the power to improve the quality, safety, and efficiency of healthcare," observed Englander. "Numerous efforts are underway, both at the national and local levels, to enhance the adoption of technology within the healthcare industry. Several barriers to entry exist, though, including cost, complexity, and the need to significantly alter work processes and culture," said Englander.

To listen to a podcast with S&P equity analyst Jeffrey Englander, click on the following link. http://standardandpoors_media.infoble.com/3vpRVkrLPXn-X3lwq4iEZ6w==/MyAudio.mp3

Individuals can purchase Standard & Poor's Industry Surveys online for immediate download at http://sandp.ecnext.com. Members of the media can request a copy from marc_eiger@standardandpoors.com.

About Standard & Poor's Equity Research Services

As the world's largest producer of independent equity research, Standard & Poor's licenses its research to global institutions for their investors and advisors. Standard & Poor's team of experienced U.S., European and Asian equity analysts use a fundamental, bottom-up approach to assess a global universe of multi-asset class securities across industries worldwide. Follow Standard & Poor's equity analysts' U.S. market commentary each day at http://www.equityresearch.standardandpoors.com/.

The equity research reports and recommendations provided by Standard & Poor's Equity Research Services are performed separately from any other analytic activity of Standard & Poor's. Standard & Poor's Equity Research Services has no access to non-public information received by other units of Standard & Poor's. Standard & Poor's does not trade for its own account. The analytical and ethical conduct of Standard & Poor's equity analysts is governed by the firm's Research Objectivity Policy, a copy of which may also be found at www.standardandpoors.com or by clicking here.

About Standard & Poor's

Standard & Poor's Financial Services, LLC, a subsidiary of The McGraw-Hill Companies (NYSE: MHP), is the world's foremost provider of independent credit ratings, indices, risk evaluation, investment research and data. With offices in 23 countries and markets, Standard & Poor's is an essential part of the world's financial infrastructure and has played a leading role for 150 years in providing investors with the independent benchmarks they need to feel more confident about their investment and financial decisions. For more information, visit www.standardandpoors.com.

All information provided by Standard & Poor's is impersonal and not tailored to the needs of any person, entity or group of persons. Past performance is no indication of future results. Standard & Poor's and its affiliates provide a wide range of services to, or relating to, many organizations, including issuers of securities, investment advisers, broker-dealers, investment banks, other financial institutions and financial intermediaries, and accordingly may receive fees or other economic benefits from those organizations, including organizations whose securities or services they may recommend, rate, include in model portfolios, evaluate or otherwise address investment decision. This material does not take into account your particular investment objectives, financial situations or needs and is not intended as a recommendation of particular securities, financial instruments or strategies to you nor is it considered to be investment advice. Before acting on any recommendation in this material, you should consider whether it is suitable for your particular circumstances and, if necessary, seek professional advice.

This material is based upon information that we consider to be reliable, but neither S&P nor its affiliates warrant its completeness, accuracy or adequacy and it should not be relied upon as such. With respect to reports issued to clients in Japan and in the case of inconsistencies between the English and Japanese version of a report, the English version prevails. Neither S&P nor its affiliates guarantee the accuracy of the translation. Assumptions, opinions and estimates constitute our judgment as of the date of this material and are subject to change without notice. Neither S&P nor its affiliates are responsible for any errors or omissions or for results obtained from the use of this information. Past performance is not necessarily indicative of future results.

SOURCE Standard & Poor's
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