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: Skilled Healthcare (NYSE: SKH) is in serious need of a doctor after falling 14% in intraday trading Friday.

So what: As of this writing, Skilled Healthcare is already the worst-performing stock on the NYSE today. Thanks to a new proposal in Washington to cut Medicare and Medicaid reimbursements by as much as 11% next year, the stock has given back every penny it gained earlier this month, when it announced it was pondering selling itself to a high bidder.

Now what: Analysts are reminding investors that the proposal to cut reimbursements is just that -- a proposal and not yet a law. But investors are having none of it, translating an 11% drop in revenue into similar haircuts to the stock prices at Kindred Healthcare (NYSE: KND), and Sun Health (Nasdaq: SUNH) -- and punishing Skilled Healthcare even worse.

I take this as an implicit acknowledgement that Washington's action may make Skilled Healthcare less attractive to potential buyers, perhaps scaring them away entirely and scotching the deal. In which case, shareholders will be left with nothing more than a debt-laden, unprofitable healthcare provider, and no patsy to unload it on. No wonder investors are betting against it.

If you own Skilled Healthcare, you'll want to keep close tabs on developments here. Make it easier on yourself: Add the stock to your watchlist and get updates as they happen.

Fool contributor Rich Smith does not own shares of any company named above. The Motley Fool has a disclosure policy.

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