Diving brief:
- HCA Healthcare reported first-quarter results Friday that beat Wall Street's revenue expectations. The operator posted $17.3 billion in revenue and net profit of $1.6 billion, driven by patient growth and HCA's control of expenses.
- Strong hospitalized patient metrics have driven HCA's volume growth, CEO Sam Hazen told investors Friday. Inpatient admissions increased by 6% year-over-year, hospital surgeries increased by almost 2%, and equivalent admissions increased by 5%.
- “Every division saw growth in inpatient admissions. In fact, I think we had the best portfolio performance I've seen in my time at the company,” Hazen said.
Dive overview:
The operator based in Nashville, Tennessee became the latest for-profit health system to report high volumes of hospitalized patients in the first quarter.
Inpatient admissions increased 10% year over year in nearly a third of HCA's hospital portfolio, and another quarter of its portfolio increased 5%, Hazen said.
Growth occurred “even in obstetrics,” Hazen said, “and it decreased slightly.” So (it’s) very broad in terms of the range of services as well.
Chief Financial Officer Bill Rutherford said HCA's number of hospitalized patients may have increased. a “modest” improvement compared to the CMS two midnights ruler, which was released in April. The rule mandates inpatient care when a clinician determines that a Medicare beneficiary needs inpatient care that will likely last two years. midnight.
HCA attributed most of the increase in hospital patient volume to better capacity management. HCA, like its counterpart Community health systemshas worked to reduce length of stays and increase the total number of beds available to allow for higher inpatient volumes, executives said.
The system increased its inpatient bed capacity by 2% as part of its $1.1 billion capital expenditure in the first quarter, according to executives. HCA also increased its geographic presence by almost 5% during the first quarter.
Full-year capital spending expected to continue between $5.1 billion and $5.3 billion as the company pursues its objective of holding a market share of 29% in health services by the end of the decade.
“We are investing more in the company than we have ever invested because of the capacity we need and the network development we want,” Hazen told investors. “We're really excited about what we're spending our money on, and our models have proven that we can generate very positive returns.”
Outpatient surgeries decreased by approximately 2% compared to the first quarter of 2023.
Executives attributed the decline in outpatient surgeries to the lingering impact of the Medicaid redetermination process, noting a loss in Medicaid outpatient surgery volumes and “calendar effects” related to having fewer work days in March to schedule elective surgeries. Executives expected that some of the surgeries lost in the first quarter would be made up later in the year.
In terms of spending, the The operator reported progress in containing costs that weighed on the business in 2023, including labor costs and doctors' fees.
Rutherford said labor costs as a percentage of HCA's revenue improved 100 basis points year over year. Contract work has arrived down more than 20% year over year to total just 5.1% of HCA's labor costs.
Although total operating expenses remain high, at $15.1 billion, Rutherford said they are in line with HCA's expectations.
The operator reaffirmed its forecasts for 2024.