Summary and Conclusion: In making our pro-cyclical healthcare call we intended to be playing offense; however in the face of a potential slowdown in US employment and the risk of a more substantial economic deterioration in Europe, the pro-cyclical recommendation
Privately insured US persons (and presumably households) consume 2.7x the healthcare of age- and health-status adjusted persons (and households) who are uninsured As employment rises and falls, households shift from one category (un-/under-employed, un-/under-insured) to another (employed / insured), and
Utilization rises as the economy strengthens; with economic strength comes rising employment. For commercial HMOs, the question is whether the benefits of employment growth (which brings enrollment growth, sales growth, operating leverage, and improving underwriting risks at the margin) can
‘Unit demand’ for US healthcare ties closely to underlying economic measures, including but not limited to rates of employment. A critical mass of these measures is available during or immediately after a given quarter; using these we model current-quarter unit
The Bureau of Labor Statistics on Friday published the April 2012 Employment Situation report, which includes payrolls and hours worked at the industry level through March 2012. While aggregate healthcare hours, and medical / surgical hospital hours were slightly up
The link between quarterly reports and underlying healthcare demand is remarkably noisy and signals from 1Q12 results thus far are mixed; however on net we see convincing evidence of strengthening US healthcare demand With a single exception (HUM) commercial
Estimates for healthcare stocks appear too low in light of improving healthcare demand; this is especially true for healthcare sub-sectors that are highly geared to changes in patient volumes (our favorites being Non-Rx Consumables, Hospitals, and HMOs) Over the past
The Bureau of Labor Statistics on Friday published the March 2012 Employment Situation report, which includes payrolls and hours worked at the industry level through February 2012. With the exception of general med / surg hospitals, aggregate healthcare work hours
We expect the Supreme Court to rule on the Affordable Care Act (ACA) this June/July (i.e. to find the Anti-Injunction Act does not apply), and to let the Medicaid expansion stand (driving a 13 percent gain in Medicaid spending, &
Reported earnings are a surprisingly weak indicator of near-term changes in healthcare demand; the dominant settings of care (hospitals, physicians’ offices) are vastly under-sampled In contrast, monthly aggregate labor hours offer a timely and broad-based sample of activity in