Nursing home stocks rally in wake of Medicare reduction proposal

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Nursing home stocks rally in wake of Medicare reduction proposal
Nursing home stocks rally in wake of Medicare reduction proposal
Nursing home operators may be lamenting the government's proposed Medicare payment cuts, but the stock market has reacted differently. Share prices of several publicly traded long-term care chains spiked Monday, according to a recent market analysis.

Shares of Kindred Healthcare Inc. rose 6.2%, while Skilled Healthcare Group Inc.'s stock jumped 9.5%, and Sun Healthcare Group Inc. shares soared 11.5%, The Wall Street Journal reported. News of the $390 million in cuts appeared to come as a relief to investors. Many analysts had been predicting a larger reimbursement cut, the Journal said.

The Centers for Medicare & Medicaid Services proposed on Friday trimming Medicare payments to skilled nursing facilities by 3.3% in FY 2010-a $1.050 billion "adjustment." Although CMS said the cuts would be largely offset by a 2.1% market—basket increase (or $660 million), providers still rallied against the proposal.
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