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Fran Murphy

 
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  • An Opportunity in Healthcare Stocks [View article]
    At this point I would take money off the table for SNF-reimbursed stocks - FVE, SKH, SUNH and related REITs. The earnings are going to be bad as everyone know but I think any upside has been priced in through the strong advance. Further pressure will be exerted on this group through Medicare and Medicaid cuts.
    Feb 8, 2012. 11:38 AM | Likes Like |Link to Comment
  • Five Star Quality Care Poised To Profit [View article]
    When you capitalize the leases, you must convert existing lease payments to a combination of depreciation and interest which in turn increases EBITDA. This is fairly esoteric but you could do the math based on about an 8% lease rate and 25 year lease term.

    The secondary was unfortunate but provided a better balance of debt (including capitalized leases) and equity. You could argue that the timing was fortuitous for FVE also considering the subsequent events. But would like to see greater shareholder empathy on part of company.

    Would love to see pharmacies, SNFs and IRFs sold with efforts concentrated on senior housing.
    Oct 12, 2011. 09:02 PM | Likes Like |Link to Comment
  • Five Star Quality Care Poised To Profit [View article]
    I expect Medicare rates to increase about 2% on Oct. 1, 2012. Cuts will come but not immediately. FVE is in process of selling of its remaining SNF business.
    Oct 12, 2011. 08:48 PM | Likes Like |Link to Comment
  • Petrobras: Maligned Stock to Benefit From the Continuing Oil Rally - Part II [View article]
    It may be naive, but I'm hoping that vested interest will win the day in Brazil. Certainly, no one can be happy about Brazil's overt role in managing this company, but it is also clear that any government can adversely affect the investment environment.

    If Brazil and management act prudently, Petrobras has the potential for explosive growth. No other oil major can claim the same.
    Aug 8, 2011. 09:21 PM | Likes Like |Link to Comment
  • An Opportunity in Healthcare Stocks [View article]
    Knowing that the HCR deal was negotiated in Nov., leads me to think it might have excluded much of the uplift of RUG IV. Where did you get the 1.5 DSCR post the 11% reduction? Conference call? The stock did get hit hard to day - I see what you're saying.
    Aug 8, 2011. 09:08 PM | Likes Like |Link to Comment
  • An Opportunity in Healthcare Stocks [View article]
    I don't follow REITs. But I would say the concern is that HCP recently bought ManorCare assets for $6B and have the whole value ascribed to net investment in direct financing leases. To the extent that any of the big SNF deals (ManorCare and Genesis) didn't generate goodwill, the value is sitting in property or the lease receivable. The returns on those assets is going to impaired by reduced Medicare reimbursement. And although Medicare reimbursement might only represent 30% to 40% of revenue at a skilled nursing company it generates the preponderance of one's income.
    Aug 8, 2011. 08:32 PM | Likes Like |Link to Comment
  • An Opportunity in Healthcare Stocks [View article]
    Yes, the operating companies act as a buffer or "margin of safety" for the Reits. But the properties owned by the Reits are valued based on cash flow and that cash flow just took a big hit which will put pressure on dividends, debt service ratios and fixed asset valuations. Watch for large goodwill writeoffs due to the many big deals done this year.
    Aug 8, 2011. 05:48 PM | Likes Like |Link to Comment
  • An Opportunity in Healthcare Stocks [View article]
    However, if you wanted to do some bottom fishing, SKH would be a great place to start. FVE and SUNH should also have some good upside.
    Aug 8, 2011. 04:40 PM | Likes Like |Link to Comment
  • An Opportunity in Healthcare Stocks [View article]
    Ha ha...Seeking Alpha named the article for me. I had named it The Sorry State of Skilled Nursing!
    Aug 8, 2011. 04:28 PM | 1 Like Like |Link to Comment
  • Shares of health-care providers tumble after Medicare announced late Friday that it will cut payment rates to skilled nursing facilities by 11.1% next fiscal year. The decision adjusts for an "unexpected spike" in nursing-home payments this fiscal year. SUNH -54.3%, KND -25.5%, SKH -39.2%, FVE -8.5%, ENSG -16.9%, SRZ -2.9%, NHC -12%, AMED -2.3% (earlier).  [View news story]
    Medicare rates are absorbed by skilled nursing facilities (SNF) directly not insurers or the public. SNF's manage these pricing changes by becoming better at scoring patients under the existing system; cutting costs; and, when necessary, restructuring via Chapter 11. Over the past year (including this decrease), Medicare rates have been a net positive (+3% or more) for SNF providers, just not the home-run they had hoped for. The good news for them is that they get to keep the one year windfall.
    Aug 1, 2011. 10:50 AM | Likes Like |Link to Comment
  • In a sharp reversal, the greenback gives up the bulk of its overnight gains against the yen and the swiss franc, now back at all-time lows. Perhaps the focus is now returning to the struggling U.S. economy. Miller Tabak's Mike Pietronico says there is only one "fact" emerging from the debt deal - "no stimulus coming in 2012."  [View news story]
    The Fed will likely continue to use monetary policy as the US government's main stimulus tool. Otherwise, I would agree that fiscal intervention will be very limited.
    Aug 1, 2011. 07:37 AM | 1 Like Like |Link to Comment
  • Petrobras: Maligned Stock to Benefit From the Continuing Oil Rally - Part II [View article]
    Good read on Petrobras -

    blogs.forbes.com/afont.../
    Jul 30, 2011. 10:38 AM | Likes Like |Link to Comment
  • Medicare Misses the Mark [View instapost]
    Kindred Healthcare, Inc. (NYSE:KND) shares slumped 21.44 percent to $14.80 in post market trading session after Medicare said it will cut payment rates to skilled nursing facilities by 11.1 percent next fiscal year.

    Skilled Healthcare Group, Inc. (NYSE:SKH) shares slumped 19.2 percent to $7.11 in post market trading session on news that Medicare will cut payment rates to skilled nursing facilities by $3.87 billion following an April proposal designed to remedy overpayments to the industry.

    Five Star Quality Care, Inc. (NYSE:FVE) shares declined 9.49 percent to $4.48 in aftermarket trading session. The Centers for Medicare & Medicaid Services (CMS) Friday announced a final rule reducing Medicare skilled nursing facility (SNF) Prospective Payment System (PPS) payments in FY 2012 by $3.87 billion or 11.1 percent lower than payments for FY 2011.
    Jul 30, 2011. 10:21 AM | Likes Like |Link to Comment
  • Medicare Misses the Mark [View instapost]
    It's official - a 12.6% cut in SNF Medicare rates going forward (before the market basket and MFP updates) - 11.1% decrease, net.

    DEPARTMENT OF HEALTH & HUMAN SERVICES
    Centers for Medicare & Medicaid Services
    Room 352-G
    200 Independence Avenue, SW
    Washington, DC 20201
    Office of Media Affairs

    MEDICARE NEWS

    FOR IMMEDIATE RELEASE Contact: CMS Public Affairs
    July 29, 2011 (202) 690-6145


    CMS ANNOUNCES MORE ACCURATE FY 2012 PAYMENTS FOR MEDICARE SKILLED NURSING FACILITIES
    CASE-MIX INDEXES RECALIBRATED TO BETTER ALIGN PAYMENTS WITH COSTS

    Also requires a new assessment to capture changes in therapy services, and allocation of group therapy time to ensure payment accuracy

    The Centers for Medicare & Medicaid Services (CMS) today announced a final rule reducing Medicare skilled nursing facility (SNF) Prospective Payment System (PPS) payments in FY 2012 by $3.87 billion, or 11.1 percent lower than payments for FY 2011. The FY 2012 rates correct for an unintended spike in payment levels and better align Medicare payments with costs.

    “CMS is committed to providing high quality care to those in skilled nursing facilities and to pay those facilities properly for that care,” said CMS Administrator Donald M. Berwick, M.D. “The adjustments to the payment rates for next year reflect that policy.”

    CMS is now recalibrating the case-mix indexes (CMIs) for FY 2012 to restore overall payments to their intended levels on a prospective basis. The SNF PPS uses a resource classification system known as Resource Utilization Groups Version 4 (RUG-IV), which assigns a patient to a RUG group to determine a daily payment rate. Each RUG group consists of CMIs that reflects a patient’s severity of illness and the services that a patient requires in the skilled nursing facility (SNF). In transitioning from the previous classification system to the new RUG-IV, CMS adjusted the CMIs for FY 2011 based on forecasted utilization under this new classification system to establish parity in overall payments. SNFs have been paid under RUG-IV since Oct. 1, 2010.

    CMS found that the parity adjustment made in FY 2011, which was intended to ensure that the new RUG-IV system would not change overall spending levels from the prior year, instead resulted in a significant increase in Medicare expenditures during FY 2011. This increase in spending was primarily due to shifts in the utilization of therapy modes under the new classification system differing significantly from the projections on which the original parity adjustment was based.

    “Additional data analyzed by CMS since publication of the proposed rule confirmed the extent of the overpayments that have occurred since implementation of the RUG-IV system,” said Jonathan Blum, deputy administrator and director of the Center for Medicare. “We are also making several improvements to our payment system to strengthen its integrity.”

    The FY 2012 recalibration of the CMIs will result in a reduction to skilled nursing facility payments of $4.47 billion or 12.6 percent. However, this reduction would be partially offset by the FY 2012 update to Medicare payments to skilled nursing facilities. The update — an increase of 1.7 percent or $600 million for FY 2012 — reflects a 2.7 percent increase in the prices of a “market basket” of goods and services reduced by a 1.0 percent multi-factor productivity (MFP) adjustment mandated by the Affordable Care Act. The combined MFP-adjusted market basket increase and the FY 2012 recalibration will yield a net reduction of $3.87 billion, or 11.1 percent.
    Jul 30, 2011. 09:57 AM | Likes Like |Link to Comment
  • Oil prices fall as nation's stockpiles build [View article]
    Per WSJ 7/29 -

    The Energy Information Administration stocks report Wednesday showed a build of 2.3 million barrels, with most--if not all--representing barrels released from U.S. Strategic Petroleum Reserves going into storage.

    With more SPR oil to be released over the next five weeks, further gains in inventories would add pressure on the market, Pawlicki added.
    Jul 29, 2011. 07:52 AM | Likes Like |Link to Comment
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