Why HCA will fare better than Tenet and CHS under the GOP tax plan

The House on Wednesday approved Republicans' tax plan, which is now headed to President Donald Trump for signature. The plan to overhaul the tax code is a mixed bag for the healthcare industry, according to The Wall Street Journal.

The GOP tax plan would lower the corporate tax rate to 21 percent from 35 percent. This change would benefit profitable healthcare companies, including Nashville, Tenn.-based HCA Healthcare.

However, other for-profit hospital operators will not fare as well under the tax plan due to its limit on interest rate deductions. Under the plan, companies could deduct up to 30 percent of earnings before interest, taxes, depreciation and amortization. After four years, interest expense deductions would be further reduced.

This change could hurt companies with large debt loads, such as Franklin, Tenn.-based Community Health Systems and Dallas-based Tenet Healthcare, and will likely cause many healthcare companies to further evaluate their debt levels. 

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