Tenet Healthcare Shares Popped: What You Need to Know

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of hospital operator Tenet Healthcare (NYSE: THC  ) jumped as much as 12.4% on rather average trading volume.

So what: Last week, the American College of Cardiology reported that Medicare and Medicaid will make it harder to get approval for cardiac care, spinal fusion, and joint replacements in several states, and health-care stocks fell like flies. Today, Goldman Sachs says that the fears of denied Medicare claims by the boatload are overdone, and the stocks are bouncing back with a vengeance: Health Management Associates (NYSE: HMA  ) jumped as much as 11.3%, HCA (NYSE: HCA  ) gained 7% at most, and Community Health Systems (NYSE: CYH  ) enjoyed a 5.7% bounce.

Now what: So Goldman tells you not to worry about the more onerous approval procedures, while Wells Fargo thinks we'll see significantly fewer treatments approved, "because hospitals will begin making sure that every patient meets the coverage criteria." I'm inclined to agree with Goldman here, because hospitals already look over insurance criteria with a very jaundiced eye. So, not much has changed and this adjustment simply puts hospital-chain share prices back where they belong.

Interested in more info about Tenet Healthcare? Click here to add it to My Watchlist.