RE:RE:RE:RE:RE:RE:RE:RE:RE:The Revised Cut's Adjustment to FCF is Very SmallJohnnyUtah16 wrote: Pete I don't believe that is the case, listen to the conf call. They discussed wages for nurses, doctors, etc and the raising or lowering of their rates. They have zero say in any of that it is supply and demand. Rates are higher where there are less staff. The question was asked if rates would be going up for these staff and they stated we cant control that. So its just as possible that wages up as them going down.
But with CMS rates lowered, there are going to be clinics that will just stop offering these services, thus reducing the demand for these nurses and doctors, which in turn will drive down wages and costs. Nobody will offer these services if they cannot make a reasonable profit, thus allowing the more efficient operators gain a larger market share. Moreover, if enough patients are unable to access these services because clinics have stopped offering these services due to lower reimbursement costs, the consequence of that will be poorer health outcomes, which will force CMS to increase reimbursements down the road.
I would also assume the multiple on future M&As will decrease with these lower reimbursement rates.
Time will tell how CRH reacts to these market and regulatory forces, but the stock was already beaten up pretty good prior to this news. It's easy to continue to beat up on this stock because it fell from $12 to under $2.40 but it's a name that is fairly valued between $5 to $6 so $2.40 is a bargain based on today's price.