Two healthcare services companies reported strong fourth quarter earnings last week, moving the entire group up in sympathy, and providing some happy investors with a safe haven from the horrors of the financial sector. Could these healthcare services be a needed medicine for your portfolio in this bear market? Let's take a closer look.

Eight Ways To Survive A Market Downturn

Kindred Healthcare (NYSE:KND) is a diversified healthcare company offering services in three different businesses. The company owns 82 hospitals with 6,428 beds, 228 Nursing Centers and provides rehabilitation therapy through 348 external providers. It reported $0.56 earnings per share compared to its guidance of $0.35-0.45. The company said the upside was due to strong results in its hospital division. (For more, see Investing In The Healthcare Sector.)

Odyssey Healthcare, Inc. (NASDAQ:ODSY) is a nationwide provider of hospice care, including nursing, and social and medical services to terminally ill patients. The company reported net income of $5.7 million, or $0.17 per share. The company saw a 1.6% sequential increase in admissions, offset by increased discharges toward the end of the quarter. Odyssey was also helped by new legislation enacted and signed into law by the Obama Administration last week that enacted a one-year moratorium on cuts in funding for hospice care.

So are the strong results sustainable? The Healthcare industry has always had a strong wind at its back in the form of an aging and more obese American population that requires more medical services, and that doesn't look to change in the foreseeable future. This has led the sector to be considered defensive in nature and less susceptible to the discretionary whims of consumers. (To keep reading on this subject, see Long-Term Care: More Than Just A Nursing Home.)

The strong secular trend is offset somewhat by exposure to the government to pay a large part of revenues. This leaves the industry at the mercy of both Congress, which changes the rules frequently, and a large army of government bureaucrats, who write incomprehensible regulations. Both parties mean well, and have the best intentions, but the consequences of their actions can lead to an occasional black swan event for healthcare stocks. It's hard to predict when these swans will occur or what the outcome will be.

Competitors of these two companies haven't had as much good fortune during the downturn. Emeritus Corporation (NYSE:ESC) operates in 36 states, and is down more than 35% year-to-date. In addition, the COO of Emeritus just resigned to take a position with National Health Investors, Inc. (NYSE:NHI). And the sun seems to have set on Sunrise Senior Living (NYSE:SRZ), the worst performing stock in the sector, as it is down 97% from it 52-week high. The company just signed a standstill agreement with its lender, while it renegotiates its debt.

Take Two, And Enjoy Long-Term Health
The healthcare services sector was helped last week by a couple of good earnings reports and a well-timed legislation that helped revenues for the industry. Although it would be tough to use the word "safe" in the context of the stock market, this group's defensive nature may help it through the recession and bear market with less wounds than its counterparts in other industries.