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The medical services industry will be financially challenged in the mid-1990s due to Medicare and Medicaid budget limitations and other forces. A 33% decline in utilization since 1975, technology, and consolidation have lowered hospital earnings and this will continue through 2000. Medical service earnings are expected to reach double-digits in the late 1990s, but investors will wish to diversify their holdings in this industry.

The medical services industry continues to be affected by federal health policy guidelines. For example, therapeutic guidelines for patients with heart failure will affect future business prospects of companies providing pharmaceuticals services such as electrocardiography. Additionally, passage of a national healthcare plan will have an effect on the medical services industry, although not earlier than 1995. Investments in this industry are positioned to achieve double-digit growth in annual profits until at least the year 2000.

Healthcare stocks should perform above average during 1994. The industry is growing through the formation of healthcare alliances, mergers and acquisitions and new construction projects. Companies in the managed care area should benefit from changes under healthcare reform. However, reform itself and the pressure on prices are introducing uncertainties that could affect long-term investments. These trends may be balanced by increased demands under an aging population.

Medical service company stocks are expected to be volatile in 1994 until the outline of a new healthcare plan is given. The growth of both acute and subacute care has meant profits and a healthy outlook for the future of the industry. Companies which function as managed care specialists should do quite well, as enrollment in health maintenance organizations expands from its current 19% of the population. Profits should rise 10-15% each year through 1996.

National Health Laboratories Inc. earned $20.2 million, or 20 cents a share, on sales of $32.9 million for the third quarter ending Sept. 30. That compares to income of $15 [...]

National Health Laboratories Inc. National Health Laboratories Inc. earned $16.9 million, or 17 cents a share, on sales of $107.7 million for the fourth quarter ending Dec. 31, 1989. That [...]