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

Posted by notapundit in Economic News, US News.
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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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