Healthcare is a big business with many components that do not directly touch or influence the care of individuals. The recent healthcare bill expanded coverage and made other changes to services which may increase or improve the care of individuals, but thus far, the discussions have centered around the cost and coverage of individuals. From health insurers to the managers and makers of pharmacology products to the distributors of those drugs and other equipment, the services that actually deliver care are often overshadowed. But there are many companies that focus on delivering high quality care. From improving the mortality rates of newborns to extending the lives of those with kidney failure, companies that deliver high quality care often get lost in the picture.

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Improving the Lives of the Young and Old
Mednax National Medical Group (NYSE:MD) delivers two different healthcare specialties: Pediatrix Medial Group, which practices neonatal, maternal fetal and other pediatric specialty services, and American Anesthesiology, which provides anesthesiology services in hospitals and doctor offices. The markets for both of these specialties continue to expand as baby boomers live longer and require more surgeries and because prematurity and low birth rates continue to trend higher. Mednax's businesses operate in healthcare niches which are rarely the target of reimbursement cuts by government or privately run health insurers, providing some stability and consistency. Additionally, these services are primarily hospital based and do not require additional back office billing or collections, limiting bad debt exposure. (For more, see Investing In The Healthcare Sector.)

Healing the Mind
Psychiatric Solutions (Nasdaq: PSYS) is a provider of in-patient behavioral health care services. PSYS operates over 30 facilities in 32 states in the U.S. as well as in Puerto Rico. PSYS has a history of providing operating margins that exceed its nearest public peer and the industry while trading at par on a P/E basis. This year's growth rate far exceeds the industry and its forward PEG ratio, at less than 1.0, falls below its peers. (For more, see PEG Ratio Nails Down Value Stocks.)

Healing the Body
Community Health Systems (NYSE:CYH) operates 122 hospitals in the rural U.S. Like its peers, CYH has been hit with high bad debt and been subject to changes in reimbursement from the government and private health insurers. As such, the company has needed to increase productivity and lean out its operations. The hospital companies will continue to be subject to headline and reimbursement risks, but over the long haul, it is believed that operating in rural environments will protect CYH.

Breathing in Life
Lincare Holdings (Nasdaq:LNCR) provides oxygen therapy in the at-home setting. LNCR along with its peers have been subject to often and significant reimbursement risk that greatly impact the stock. But the long-term trends of treating patients at home and people are living longer with various respiratory diseases provide positive growth fundamentals.

Bottom Line
The business of healthcare often gets in the way of providing quality care solutions. However, you would expect that the business of providing quality care will win in the long run. (For more, see Healthcare Funds: Give Your Portfolio A Booster Shot.)

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  1. Equity

    The value of an asset less the value of all liabilities on that ...
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  5. Blanket Medical Expense

    An insurance policy which provides coverage for all medical expenses ...
  6. Classified Insurance

    Insurance coverage provided to a policyholder that is considered ...
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