Please ensure Javascript is enabled for purposes of website accessibility

Are These 3 Hospital Stocks Ready for the Coronavirus Peak?

By Keith Speights - Mar 17, 2020 at 7:03AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Community Health Systems, HCA, and Tenet Healthcare are bracing for what could be a tumultuous few months.

In the war against the coronavirus outbreak, hospitals are definitely on the front line. And hospital stocks haven't been immune to the toll the pandemic is taking on most other stocks. Shares of Community Health Systems (CYH 1.70%) and Tenet Healthcare (THC 4.47%) have plunged more than 60% off their highs from earlier this year, while HCA (HCA 2.76%) stock is down more than 40%.

But the U.S. is still only in the early stages of dealing with the repercussions of the novel coronavirus and the disease that it causes, COVID-19. Are these three hospital stocks ready for the coronavirus peak?

Patient wearing a mask with her hands against a glass door with a sign stating "outbreak area"

Image source: Getty Images.

What they're doing 

All three of the publicly traded major hospital chains are bracing themselves for handling a higher number of COVID-19 cases. HCA has dealt with influenza epidemics in the past and is putting its lessons learned from those times into practice now.

The company started educating its healthcare professionals several weeks ago about the novel coronavirus. It has established procedures to funnel patients with suspect respiratory symptoms away from other patients who don't have such symptoms. Patients diagnosed with COVID-19 will be given masks to help reduce the potential for spreading the disease to others.

Tenet is setting up drive-up testing for COVID-19. Staff at Tenet hospitals will check individuals' temperatures and administer diagnostic tests with the person remaining in their vehicles. The patients will then be sent home to be self-quarantined until results from the COVID-19 test are available. The severity of each patient's condition will then determine what next steps are taken.

All of these are the kinds of measures that many hospitals are likely to take. But the coronavirus threat hasn't been front and center until recently despite the major problems that the virus caused in China earlier this year. In Community Health Systems' quarterly conference call on Feb. 20, for example, company executives didn't mention the outbreak at all nor were they asked by analysts about any plans for responding to a potential crisis in the U.S.

What they could face

The challenges that all hospitals might face in the coming weeks and months are daunting. At least one hurdle appears to be becoming less serious, though. There haven't been enough COVID-19 diagnostics tests thus far, but more test kits are on the way. Roche (RHHBY 4.07%) alone plans to ship 400,000 of its cobas SARS-CoV-2 Test for COVID-19 each week starting immediately.

But diagnosing COVID-19 is one thing; treating the disease is another. It's possible that there won't be enough intensive care beds to handle patients if the outbreak is severe. Italy is facing this issue already.

The availability of beds isn't the only problem. Many patients will likely require ventilators. No one knows for sure how many ventilators there are in the U.S. right now. The latest data is from way back in 2010 estimated that there were a little over 62,000 ventilators in use at the nation's acute care hospitals. The U.S. government also has an unknown number of ventilators that it's stockpiled for potential emergencies including biological and nuclear attacks.

Another worrisome problem relates to hospitals' staff. With no vaccines for COVID-19, physicians and nurses could become infected themselves. Even if they don't, the sheer numbers of patients could be overwhelming and strain the staffing capacities even of large hospitals.

The best hope

Perhaps this dire scenario won't happen. The best hope of avoiding it is if Americans follow the social distancing policies that federal, state, and local governments are urging people to take. This approach has been dubbed "flattening the curve," a reference to spreading the number of COVID-19 cases out over a longer period of time to prevent overwhelming the healthcare system.

Regardless, the next few months are likely to be tumultuous for HCA, Tenet, Community Health Systems, and other hospitals. And the period is likely to be extremely volatile for healthcare stocks overall, and hospital stocks in particular. The war against the coronavirus will no doubt be won. How long victory will take is the big unanswered question.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Community Health Systems, Inc. Stock Quote
Community Health Systems, Inc.
$4.20 (1.70%) $0.07
HCA Healthcare, Inc. Stock Quote
HCA Healthcare, Inc.
$182.33 (2.76%) $4.89
Tenet Healthcare Corp. Stock Quote
Tenet Healthcare Corp.
$58.24 (4.47%) $2.49
Roche Holding AG Stock Quote
Roche Holding AG
$41.64 (4.07%) $1.63

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 06/27/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.