Tenet Healthcare Corp (NYSE:THC) is about to release earnings. Follow this Bear Case Scenario”
As the US struggles with unemployment Tenet will struggle with collecting receivables. Tenet is a consumer company much like Wal-Mart or Target. Hospitals are fixed locations and cannot move away from unfavourable markets and demographics.
Medicare reimbursement rates are cutting into Tenet margins. Obamacare views these cuts as bringing efficiency into the health care system. As the budget deficit is wrestled down there will have to be cuts to the reimbursement rate to make the arithmetic work.
State Budgets are under pressure as well. Reimbursement rates are not looking strong.
George Gutowski writes from a caveat emptor perspective.