Shares of Orange County’s three publicly traded nursing home companies plummeted Friday on news of a possible double-digit Medicare payment cut.
Irvine-based Sun Healthcare Group Inc.’s shares closed down 14% to a market value of $288 million.
Shares of Foothill Ranch’s Skilled Healthcare Group Inc. closed down 16% to a market value of $464 million.
And Mission Viejo-based The Ensign Group Inc. ended Friday trading down 13% to a market value of $577 million.
The Centers for Medicare and Medicaid Services is proposing two possible changes to how it pays nursing homes, including one that could result in a 11.3% Medicare rate cut for nursing homes starting Oct. 1.
Regulators said that proposal adjusted for what it called an unexpected spike in nursing home payments in the 12 months ending Sept. 30.
The other method would provide a 1.5% rate increase.
Analyst Arthur Henderson of Stamford, Conn.-based Jefferies & Co. told Dow Jones that the proposal was “draconian,” but also said that the final impact “will likely be less onerous than this proposal.” Henderson follows Sun and Skilled, but not Ensign.