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Select Medical Bonds Up On Proposed Medicare Payment Rule January 26, 2007

Posted by notapundit in Economic News, US News.

NEW YORK (Dow Jones)–Select Medical Corp. bonds are rallying in active trade Friday morning after the Centers for Medicare & Medicaid Services Thursday proposed a new rule that would result in milder-than-expected reductions in certain Medicare reimbursements.

Select Medical’s 7.6% bonds due 2015 are up 3.375 cents at 89.25 in active trade Friday morning, according to MarketAxess. The company’s floating-rate notes due 2015 have gained 6.25 points to 91.75.

Market participants attributed the jump in Select Medical’s bonds to newly proposed CMS guidelines that would result in a 2.9% reduction in Medicare payments to long-term care hospitals, which the CMS defined as hospitals with an average Medicare inpatient length of stay of greater than 25 days. Select Medical is a privately held company based in Pennsylvania that operates 97 specialty hospitals in the U.S.

In December, Standard & Poor’s had lowered its ratings on Select Medical to single-B from single-B-plus with a negative outlook.

“The rating downgrade reflects our increasing concern that the hospital chain’s operations and financial profile will continue to be adversely affected by a particularly weak reimbursement environment for long-term acute care hospitals, flat patient volume, and increasing operating expenses,” David Peknay, an analyst at S&P said at the time.

By Michael Aneiro; Dow Jones Newswires


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