After several trying years on the staffing front, HCA Healthcare Inc. executives say they are close to being back to their pre-pandemic use of contract labor.
Nashville-based HCA allocated about 7.1 percent of its salaries and wages spending in the first quarter (which totaled nearly $7.1 billion) to contract workers, a sizable drop from 9.5 percent in the first three months of 2022 and from 7.8 percent in Q4. The year-over-year drop in spending was more than 20 percent, which on a dollar basis comes out to roughly $150 million.
“The improvement in turnover rates accelerated from the fourth quarter and we ended the quarter close to pre-pandemic levels,” CEO Sam Hazen told analysts on an April 21 conference call discussing HCA’s first-quarter results. “Registered nurse hiring also improved in the quarter. Hiring increased almost 19 percent compared to the previous four-quarter average.”
Like other large healthcare employers, Hazen and his team have had to prioritize investing in their workforce after the stresses and dislocations caused by COVID-19. That has meant raising wages, improving workflows and funding training programs, including the company’s Galen College of Nursing network. CFO Bill Rutherford said on the conference call that, as those initiatives mature, they should let HCA lower its share of spending on contract labor to between 6.5 percent and 7 percent—which will be within shouting distance of the company’s pre-pandemic range of 6 percent.
“We think we can continue to make progress,” Rutherford said. “We are investing much of the benefit of contract labor back into our existing employees.”
HCA leaders’ comments about a healthier labor market jive with a recent report from nonprofit research group Altarum that showed that hospital employment across the country is now higher by 42,000 workers than just before COVID’s rapid spread in early 2020. On the flip side, Altarum pointed out, is nursing and residential care employment, which is down 270,000 people over three years.
During the first three months of the year, HCA posted a net profit of more than $2.6 billion, up from $2.0 billion a year earlier, on revenues of $15.5 billion. Total admissions at the company’s 182 hospitals rose 4.4 percent to more than 525,000 (with non-COVID admissions jumping 12 percent) while inpatient surgeries climbed 3.6 percent.
Looking ahead to the rest of 2023, Hazen and Rutherford have lifted their earnings guidance as well as their capital spending forecast. The latter now stands at $4.6 billion, up from $4.3 billion three months ago, and reflects some inflationary pressures. But, Hazen added, it also speaks to the opportunities HCA still has to grow in its metropolitan markets around the country—where it has a market share of about 27 percent—by investing in new hospitals and outpatient facilities and by expanding existing properties.
“In the first quarter, the company ran approximately 73 percent to 74 percent occupancy in its inpatient facilities. And we need to have sufficient capacity as we build up our staffing over time,” Hazen said. “We need physical capacity to accommodate what we believe to be the demand for health care. So the projects are really mixed among those three things: land acquisitions for future hospital development; outpatient network development; and then relieving capacity constraints.”
Shares of HCA (Ticker: HCA), which last week also announced an investment in automated documentation venture Augmedix, rose nearly 4 percent to about $281 after the company’s earnings report. Over the past six months, the shares have risen by about a third, growing the company’s market capitalization to $78 billion.
