4.1% Jump in Hospital Admissions Brings Extra Revenue to HCA
By Higher utilization of healthcare services has brought an earnings bump to Hospital Corporation of America.
- A significant jump in the number of hospital admissions helped to bump up reported revenue during the third quarter for Hospital Corporation of America (HCA) Holdings, one of the largest hospital chains in the nation. Same-facility admissions increased 2.8 percent over the past year, HCA said in a press release, while same facility equivalent admissions rose 4.1 percent, helping to drive a 9 percent increase in overall revenue. Milton Johnson, President and CEO of HCA, attributed about one-third of the corporation’s $1 billion growth over the past year to Affordable Care Act (ACA) reforms and the remaining two-thirds to improved cash flow from core operations.
“Healthcare exchange admissions continued to increase in the quarter. We also saw significant reductions in our uninsured volumes during the quarter,” Johnson said during a call with investors. “Last quarter, we disclosed that we finalized exchange contracts in all of our Texas markets with UnitedHealthcare. Today, we’re announcing that we have also finalized exchange contracts with United for all of our major Florida markets. We believe we are positioned well as the exchange marketplace continues to evolve.” Johnson predicted that the impact of healthcare reform efforts will comprise around 4% of HCA’s 2014 adjusted growth, which is more than previously thought.
HCA manages 162 hospitals and 115 freestanding surgery centers in the United States, and provides between four and five percent of all inpatient care delivered in the country. The healthcare giant experienced higher rates of utilization for many types of services, including emergency room visits, up 7.3 percent over the past year, inpatient surgeries, up 1.4 percent, and outpatient surgeries, which rose 1.9 percent.
“Same-facility, self-pay and charity admissions declined 14.8% in the quarter, while equivalent admissions declined 8.9 percent,” added William Rutherford, Executive Vice President and Chief Financial Officer, during the earnings call. “This represents 7.3% of our total admissions compared to 8.8% last year. Managed care and exchange admissions increased 3.8%, and equivalent admissions increased 5.6% on a same-facility basis in the third quarter compared to the prior year.” Uninsured emergency room visits dropped by around 4 percent, he added, even as overall same-facility ER use rose by 7.3 percent.
While such a large system provides an important barometer for the healthcare industry, HCA’s significant increases in utilization rates are at odds with a recent report from the Healthcare Cost Institute, which found an overall downward trend in the use of healthcare services. In the report, acute inpatient hospital admissions dropped by 2.3 percent and outpatient visits decreased by 0.8 percent even though spending on services increased markedly.
During the call, HCA announced its plans for the acquisition of CareNow, a chain of urgent care centers in the Dallas area, which served around 9 percent of the Dallas-Fort Worth population in 2013. HCA also noted that it had acquired a company focused on technology platform improvements that would improve its EHR workflows and the online experience for its physicians.
