HCA CEO: We Don’t See Patient Growth Being Disrupted
HCA Healthcare Inc. CEO Sam Hazen says his team expects Medicaid changes in coming years to be “manageable” and that the hospital market leader is working on cost-containment plans to absorb possible hits to the Health Insurance Marketplace should some tax credits be pulled as expected.
Speaking after Nashville-based HCA reported second-quarter earnings July 25—results that let him and CFO Mike Marks raise their full-year outlook—Hazen said the demand for healthcare services “appears to have been inelastic” over longer periods of time and didn’t echo recent sentiments from Tim Hingtgen at Community Health Systems Inc. that waning consumer confidence is putting a dent in healthcare utilization.
“It’s difficult for us to point to consumer confidence, at least across our portfolio, as a driver of activity,” Hazen said on a conference call. “We had good commercial growth in a lot of categories […] We’re still pretty confident […] in the demand for health care across our markets and we don’t see that being disrupted too much in the short run.”
Hazen voiced his confidence in HCA’s volumes even though he and Marks told analysts they’ve lowered their full-year outlook for growth in equivalent admissions by a percentage point to between 2 percent and 3 percent. During the second quarter, that metric rose 1.7 percent versus the spring of 2024, which lowered the company’s year-to-date growth rate to 2.3 percent.
HCA earned a net profit of nearly $1.9 billion on revenues of $18.6 billion in the second quarter. Those numbers were up from about $1.7 billion and $17.5 billion, respectively, in the spring of 2024. Equivalent patient days ticked up 0.7 percent to more than 4.8 million while revenue per equivalent admission rose nearly 4 percent to $18,276.
Hazen and Marks said the uncertainty around the future of enhanced tax credits for consumers buying federal marketplace policies has led them to start developing strategies that would let HCA cut costs to offset volumes they might lose. Despite analysts’ best attempts to get details on those plans, the executives said those will be made public in January.
“We’re not ready to give you a revenue implication just yet because it would be inappropriate for us to do that until we have greater clarity on exactly how this lands [and] where some of these people go if they do, in fact, lose coverage,” Hazen said.
Also of note: Mark said HCA is close to hitting something of labor landmark. HCA’s allocated 4.3 percent of its salaries, wages and benefits spending during the second quarter to contract labor. During and in the wake of the COVID-19 pandemic, that figure peaked at more than double that figure and Marks pointed out that HCA’s pre-pandemic spending on contract workers was only a tick or two lower than Q2’s.
Shares of HCA (Ticker: HCA) slipped about 2 percent after executives announced Q2 results. They closed July 28 at about $340 after recovering most of that ground. They’re up slightly over the past six months, which has grown the company’s market capitalization to about $82 billion.
About the Author
Geert De Lombaerde
A native of Belgium, Geert De Lombaerde has more than two decades of business journalism experience and writes about markets and economic trends for Endeavor Business Media publications Healthcare Innovation, IndustryWeek, FleetOwner, Oil & Gas Journal and T&D World. With a degree in journalism from the University of Missouri, he began his reporting career at the Business Courier in Cincinnati and later was managing editor and editor of the Nashville Business Journal. Most recently, he oversaw the online and print products of the Nashville Post for more than a decade and reported primarily on Middle Tennessee’s finance sector as well as many of its publicly traded companies.