Encompass Health Corporation EHC recently formed a joint venture (JV) with Charleston-based MUSC Health, which is the only integrated and academic health sciences center offering improved healthcare services through education, research and patient care across South Carolina.

The JV will be responsible for operating the Encompass Health Rehabilitation Hospital of Charleston situated in North Charleston, which is part of the vast hospital network of Encompass Health. The facility, containing 49 beds, will change its name to MUSC Health Rehabilitation Hospital.

The JV, which is subject to customary approval, will offer the opportunity to provide enhanced rehabilitation services across South Carolina, where people are often grappling with chronic health disorders. This, in turn, is likely to enable Encompass Health and MUSC Health in expanding services designed for faster patient recoveries and resolving health issues of South Carolina residents more efficiently.

In fact, MUSC Health fits the bill perfectly as Encompass Health’s partner in jointly operating the North Charleston facility. The primary reason behind this suitability is superior-quality patient care services offered by MUSC Health in eight hospitals across the state. It is to be noted that MUSC Health, which till now facilitates inpatient rehabilitation services in Florence and Lancaster markets, can now provide similar services in Charleston via the JV.

Moreover, the abovementioned JV will not only enable both the healthcare providers to offer enhanced rehabilitation services but will also offer ample educational opportunities for healthcare professionals of both Encompass Health and MUSC Health. With the training programs, health professionals will be able to inculcate a wide variety of clinical skills.

We believe the JV formed with the intention of primarily offering specialized rehabilitation services is a well-timed one as the entire United States is grappling with health woes induced by the COVID-19 pandemic. The current scenario definitely calls for greater access to healthcare services, which positions Encompass Health well for growth in the long term.

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Notably, shares of this Zacks Rank #3 (Hold) healthcare provider have gained 5.5% in a year compared with the industry’s growth of 10.3%.

Other JVs

This is not the first time that Encompass Health has entered into a JV with an established healthcare system. Last month, the healthcare provider formed a JV with Knoxville-based Covenant Health, which is a healthcare system offering diverse range of healthcare services in Tennessee. Through this alliance, inpatient rehabilitation hospitals will be developed that will aid patients in recovering from debilitating illnesses and injuries. This, in turn, is likely to enable Encompass Health in resolving health issues of Knoxville residents more efficiently.

One month prior to the JV with Covenant Health, the University of Iowa Health Network Rehabilitation Hospital — a JV between Encompass Health and University of Iowa Health Systems announced in January this year — started operating.

All these initiatives underline the company’s efforts to offer improved healthcare services across the United States, where it boasts of a nationwide presence and strong portfolio of 136 hospitals, 245 home health hubs, and 83 hospice centers in 39 states and Puerto Rico.

Stocks to Consider

Some better-ranked stocks in the medical space include Select Medical Holdings Corporation SEM, Emergent BioSolutions Inc. EBS and The Ensign Group, Inc. ENSG, each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Select Medical, Emergent BioSolutions and Ensign Group have a trailing four-quarter earnings surprise of 212.61%, 127.41% and 17.08%, on average, respectively.

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