If healthcare is recession-proof, why have all but three of mainland Europe's biggest care home and hospital chains fallen further and faster than their national indices since January 1, 2008?  Some have halved in value, but many have fallen three- or fourfold.

In fact, the only big players to better the index are Rhoen Klinikum, Germany's largest hospital chain, and Fresenius, the dialysis giant who owns Germany hospital chain Helios.

So what lies behind these spectacular falls?

One answer is that they were on very high valuations before. Big European care home groups were on forward multiples of 17x to 27x  2009 net earning, which reflected hopes of private equity bids. They have now dropped to 15x (Orpea), and as low as 5x (Marseille).

Secondly, these companies simply do not appear to be very well managed. German care home group Marseille missed its sales and profit forecasts in the first half of 2008, and analysts don't like the way it bought domiciliary businesses owned by its main shareholder Uhlrich Marseille. French care home group Korian is being punished for the risky acquisition of Phoenix in Germany.

French hospital leader General de Sante is perceived as a poor communicator, whose Italian acquisitions, which it has recently shed, were a disaster. Finnish hospital chain Suomen Terveystalo is perceived as overpaying badly for Medivire's occupational healthcare arm in 2007, which left it with high debt.

Thirdly, analysts fret about the quality of earnings. For instance, Olivier Drebing at Alster Research says there is a glut of care homes in Western Germany, and this has badly affected care chain group Curanum.

Fourthly, they worry about how far sales could be hit by a recession. This is not a problem in Germany and France, where the big groups work mainly for the state or social funds, but it has hit Suomen Terveystalo in Finland. All four big Greek hospital chains are heavily reliant on cash spending by private individuals, which makes up roughly 50% of their sales. Analysts calculate that, in Greece, 20% of total sales could be discretionary.

The two largest care home groups in Germany - Marseille and Curanum - have both crashed. Marseille has fallen from €17 in January to little more than €5 today, valuing the company at €70.6m. Curanum is down from €9.7 to as little as €2 earlier this month.

Drebing says the falls have been overdone, and that neither company is in danger of bankruptcy.

Curanum has suffered from the oversupply of care home beds in western Germany, particularly in NordRhein Westphalia. "There has been a lot of hype over the last two years, and a lot of foreign investors have put a lot of money into care homes," explains Drebing. He adds that Curanum was also hit by issues around its share structure.

To a slightly lesser extent, the same has happened in France, where the biggest hospital chain, Generale de Sante, and the biggest care home chain, Korian, have both underperformed the CAC Mid 100, which has fallen 60%. Generale de Sante is down threefold from €29.5 to €8.6. Meanwhile, care home group Korian has all but halved, down from €30 to €16. Its rival Orpea has slumped from €45 to €25.

Korian is being punished for its move into Germany, where it owns Phoenix. Bruno de La Rochebrochard at Raymond James says he prefers Orpea, which has more growth in the pipeline, and whose growth is not driven by acquisition: "Korian's organic growth is just 4-5%, and its operating margins just 10%. Orpea will grow sales organically by 10-12% as it completes construction of new homes, and its margins are 14-15%including the new developments, and touching 20% without them."

Generale de Sainte has displayed a lacklustre performance, and is poor at communicating with analysts. Analysts also worry about the way the French government now pays less per procedure for work carried out in the private sector, which leaves GDS with little future price visibility.

There are very few big winners. In Germany, hospital chain Rhoen Klinikum is down just 16%, at €18, thanks to meeting profit expectations, and hopes that, as the recession bites, more public hospitals will be sold off.   Fresenius, the big dialysis group which owns Helios, one of the top three hospital chains, has fallen from €51 to €41, but this reflects other factors.