For-profit hospital operators have dealt with multiple waves of COVID-19 infections since the pandemic began that have impacted volumes during every surge.
More COVID-19 admissions have led to longer stays for higher acuity patients, while other care delayed throughout the pandemic has slowly returned despite ongoing patient hesitancy.
But nearly two years after the pandemic began, inpatient volumes, especially for surgeries, appear to still be struggling, leading for-profit operators to double down on expanding outpatient and ambulatory service lines while focusing on geographies expected to see high population growth.
Tenet is arguably at the forefront of this trend, though others are following suit as regulatory and reimbursement changes and patient preference continue to fuel the migration of certain procedures away from hospitals.
"It's definitely a trend, it's definitely something that we're very cognizant of," Universal Health Services CEO Marc Miller said on a Friday call with investors.
In the fourth quarter of 2021, Tenet reported overall admissions declined nearly 4% from a year earlier, though outpatient visits rose about 9%.
Nashville-based HCA Healthcare reported volume increases in most major categories except inpatient surgeries.
And Community Health Systems' volumes were mostly down in the fourth quarter of 2021 as there was a 7.3% decrease in admissions and 2.1% decrease in adjusted admissions compared to the prior-year period.
In a note, Jefferies analysts wrote that CHS' "outpatient business showed strength and more than offset an expected COVID-driven decline in inpatient admissions."
Universal Health Service's emergency room visits have been running at levels around 95% to 100% of pre-pandemic volumes, though "with elective, scheduled procedures, we presume that those percentages will increase in 2022 as COVID volumes decline," CFO Steve Filton said on the Friday call.
Miller said UHS is looking at expanding its freestanding emergency departments specifically, and it currently has 18 freestanding emergency departments and partnerships with third-party entities to develop more ambulatory surgical centers and home health operations in its existing markets.
"We have had a lot of success with that and we continue to evaluate a number of opportunities … that I think are going to be very positive as a standalone business, as well as what they can refer into the acute care hospitals," Miller said.
UHS is also looking to expand its reach with physician clinics that would drive business to its hospitals. It recently acquired a large physician group in California.
Miller also noted, "It's been a little bit tougher for us to get deals that we like on the ASC front, but we are currently evaluating probably all or just about all of our acute care markets right now."
Tenet, meanwhile, is well underway in building out its outpatient business through its subsidiary United Surgical Partners International. Tenet currently owns 95% of USPI, according to the company's earnings release.
Last year, Tenet completed a $1.1 billion acquisition of SurgCenter Development, giving it an ownership stake in 86 surgery centers and related support services. That deal also gave USPI exclusivity on developing a minimum of 50 new centers with SCD during a five-year period.
Tenet currently has ownership in about 440 ASCs and surgical hospitals, a spokesperson said in an emailed statement.
HCA's strategy is to target areas with significant population growth and then build out an array of services within those markets. The chain announced plans to build five new hospitals in Texas, in Dallas Fort-Worth, Houston, San Antonio and Austin.
The smaller hospitals will serve as primary- and secondary-type hospitals with basic inpatient and outpatient services that will refer patients needing higher-acuity services to HCA's other campuses.
The chain also bought Florida's largest urgent care chain at the end of 2021 for an undisclosed sum. And as the pandemic highlighted the need for at-home care, HCA purchased a majority stake in Brookdale Health Care Services' home health and hospice business.