Merger activity in the healthcare provider market drove a number of new positions among hedge funds in the last quarter, with hospitals being the largest subsector of hedge fund ownership within the healthcare category. Outpatient care saw a decline in hedge fund ownership, with DaVita HealthCare Partners Inc (NYSE:DVA) showing the largest decline according to a report prepared by Gary Taylor at Citi.

Hedge funds 5yr fund ownership total providers

Hedge funds: Acute

Equal-weight hedge fund ownership went up last quarter by 990 basis points year on year, and by 450 basis points sequentially to a 31.6 percent total float. Health Management Associates Inc (NYSE:HMA) and Community Health Systems (NYSE:CYH) have the largest percentage of hedge fund ownership, 36 and 26 percent respectively. Year-on-year hedge fund ownership increased the most for Health Management Associates and declined for Universal Health Services, Inc. (NYSE:UHS). Sequential hedge fund ownership increased the most for Health Management Associates decreased the most for Tenet Healthcare Corp (NYSE:THC).

Hedge funds: Sub-Acute

Equal weight hedge fund ownership was up 100 basis points year on year and 30 points sequentially, with Brookdale Senior Living, Inc. (NYSE:BKD) and Emeritus Corporation (NYSE:ESC) having the largest percentage of hedge fund ownership (28 and 17 percent). ESC was both the largest year-on-year increase in hedge fund ownership and the largest sequential decline in ownership.

Hedge funds: Outpatient

Equal weight hedge fund ownership was more mixed for outpatient care, up 40 basis points year on year but down 90 basis points sequentially. Gentiva Health Services, Inc. (NASDAQ:GTIV) and Amedisys Inc (NASDAQ:AMED) have the largest percentage hedge fund ownership, each at 16 percent. Amedisys had the biggest increase in hedge fund ownership in the sector both sequentially and year on year.

Hedge funds: Outsourced services

Equal weight hedge fund ownership of outsourced services fell 120 basis points annually and 30 basis points sequentially. AMN Healthcare Services, Inc. (NYSE:AHS) and Cross Country Healthcare, Inc. (NASDAQ:CCRN) have the largest percentages of hedge fund ownership, both at 18 percent. Team Health Holdings had both the largest annual and the largest sequential increases in hedge fund ownership.

Hedge funds: Crowded positions

The most crowded long positions among hedge funds in the health care industry were Health Management Associates Inc (NYSE:HMA), Brookdale Senior Living, Inc. (NYSE:BKD), Community Health Systems (NYSE:CYH), and Tenet Healthcare Corp (NYSE:THC). Hedge funds seem to be the least interested in taking long positions on Stericycle Inc (NASDAQ:SRCL), The Ensign Group, Inc. (NASDAQ:ENSG), National HealthCare Corporation (NYSEMKT:NHC), On Assignment, Inc. (NYSE:ASGN), Laboratory Corp. of America Holdings (NYSE:LH), and HealthSouth Corp (NYSE:HLS).