Healthcare spending continues to rise in the United States. Almost a trillion dollars is spent on hospital expenses. That naturally brings to the attention of investors hospital stocks such as Tenet Healthcare Corp. (NYSE: THC), Community Health Systems (NYSE: CYH), and Universal Health Services (NYSE: UHS).
As detailed in a previous article on this post, investors should always consider defensive stocks.
Hospital stocks such as Tenet Healthcare Corp., Community Health Systems, and Universal Health Services are the ultimate in defensive stocks. No matter what, there will always be spending on healthcare in the United States. It is almost one-fifth of the economy. In addition, spending for medical care continues to increase in the United States. From that, the share prices rise for hospital stocks such as Tenet, up more than 30% for 2013 (chart below).
The Affordable Care Act, or ObamaCare, should result in more hospital spending in the United States.
ObamaCare extends health insurance to more people. Studies have shown that will lead to more hospital stays. That will increase spending at hospitals.
The advanced nature of the healthcare system in the United States ensures that spending will rise. As the leader in medical technology, the United States has more to offer. That results in higher spending. The average day spend at a hospital in the United States results in a bill of around $4,000.00. In other nations, it is less than $1000.00, as reported by an article in The New York Times.
For investors, looking to have risk mitigation stocks in their portfolio, hospital stocks are ideal.
There will always be spending on medical treatment in the United States. Based on its history, it should continue to increase. That is very bullish for those owning shares of Tenet Healthcare Corp., Community Health Systems, and Universal Health Services.