Transmission of shocks among health care stock index returns

This article examines the transmission of shocks among different sectors of the health care industry using financial market data in an excess-return model. As suggested by the nature of the reimbursement schemes, we find a significant linkage between the payor and product sectors. A significant and stronger linkage between the payor and provider sector exists. Given its competitive and well-diversified operating environment, the product sector may be better positioned to absorb shocks from the other health care sectors.