Significant Consolidation Expected in All Sectors of Health Care Services; Winners Will be Names Who Provide the Most Effective and Lowest Cost of Care

Wall Street Transcript

67 WALL STREET, New York - July 26, 2013 - The Wall Street Transcript has just published its Medical Real Estate Report offering a timely review of the sector to serious investors and industry executives. This special feature contains expert industry commentary through in-depth interviews with public company CEOs and Equity Analysts. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

Topics covered: REIT Access to Capital - Affordable Care Act and Reimbursements - Hospitals, Senior Housing, Skilled Nursing and Acute Care - Medicare and Medicaid Reimbursements - Consolidation Activity - Health Care REITs

Companies include: Brookdale Senior Living Inc. (BKD), Capital Senior Living Corp. (CSU), Emeritus Corp. (ESC), The Ensign Group, Inc. (ENSG), Skilled Healthcare Group, Inc. (SKH), Hanger Orthopedic Group Inc. (HGR), Health Care REIT Inc. (HCN), National Health Investors Inc. (NHI) and many more.

In the following excerpt from the Medical Real Estate Report, an expert analyst discusses the outlook for the sector for investors:

TWST: What is your big-picture outlook on your coverage universe right now?

Mr. Hambly: I'm fairly new here, within the last two years, and so we've been building the coverage list over the last two years. One of the first things we picked up were the senior housing names, and there are a couple of reasons for that.

We thought the real estate valuation was not being properly reflected in the share prices at the time, and the other big reason is there's not nearly as much reimbursement risk. Senior housing is all private pay, not a lot of Medicare or Medicaid. Anything reimbursement-related has been tough to invest in, because you just don't know what the government is going to do, and so obviously you see a discount in names that have heavy government reimbursement.

So that was one of the first things we matriculated to, something that didn't have a whole lot of reimbursement risk, but as you build your list big enough, eventually if you're going to cover health care services you have to have some exposure to Medicare and Medicaid, so more recently this year we picked up Ensign and Skilled Healthcare Group.

Big picture, the demographics set up well for health care. I think you will see health care services continue to grow faster than the overall economy for the next 15, 20 years, and while there will always be government reimbursement risk, I think what you're going to see is massive consolidation in all the various sectors of health care services.

The winners will be the guys who are providing the most effective and lowest cost of care; that's where it's all moving, and those will be the winners. You may not really like all this reimbursement risk in, say, the skilled health care industry, but the fact of the matter is, I think the winners will be the guys that are growing through consolidation of the industry, and if they can successfully demonstrate that they're the low-cost provider, they're going to start taking market share from other people...

For more of this interview and many others visit the Wall Street Transcript - a unique service for investors and industry researchers - providing fresh commentary and insight through verbatim interviews with CEOs, portfolio managers and research analysts. This special issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

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