- Hospital giant HCA Healthcare reported a profit of $1.4 billion in the first quarter thanks to highly acute inpatient volumes, better payer mix and a rebound in surgical and outpatient volumes in March.
- That's more than double the Nashville-based system's profit the same time last year, and comes despite sluggish admissions due to the ongoing effects of COVID-19.
- On a call with investors Thursday morning on the financial results, HCA leadership said they expected volumes to recover throughout 2021, pointing at falling COVID-19 cases, but said it's too early to forecast the pacing of that recovery. The for-profit operator raised its full-year guidance as a result of the quarterly performance and the deferral of Medicare sequestration cuts through the end of the year. Shares were up more than 3% in morning trading following the results.
The coronavirus proved a significant headwind for health systems in 2020. However, larger operators like HCA have managed to weather the worst of the pandemic's financial effects, helped by cost-control measures, a large outpatient footprint and generous congressional funding the system later elected to return.
Many analysts have said they expect inpatient volumes to remain depressed in the first half of this year, but have looked forward to a recovery in volume later this year as delayed care comes to a head. That could drive a significant uptick in earnings for systems like HCA, which beat Wall Street expectations for earnings and revenue, reporting a topline of $13.98 billion, up almost 9% year over year, for the quarter.
On a same-facility basis, admissions declined 4.2% year over year, while equivalent admissions dropped 6.5%. Emergency room visits dropped 18.4% and inpatient surgeries declined 5.4%, while outpatient surgeries actually increased by 2.3%.
Despite drooping volumes, same-facility revenue per equivalent admission jumped 16.6% in the quarter, due to higher acuity patients and a more favorable payer mix, HCA said. That contributed to the system's mammoth profit growth in the quarter.
The positive trend of highly acute inpatient volumes despite lower admissions overall was also seen in the fourth quarter — and will likely carry over into the second, according to health system management.
"Generally speaking, March trends are continuing into April," HCA CEO Sam Hazen said on the call.
HCA, which operates 186 hospitals and 2,000 sites of care in 20 states and the United Kingdom, has roughly half its beds in Texas and Florida, which have been particularly slammed by COVID-19 outbreaks over the past year. But, the system is now seeing its COVID-19 cases fall.
HCA admitted almost 50,000 COVID-19 patients in the quarter, representing about a 10th of total admissions. As the quarter progressed, COVID-19 admissions declined. In January, COVID-19 admissions made up 17% of overall admissions. That percentage fell to about 8% in February and 5% in March, Hazen said.
On the call, executives said they were cheered by the results and expect continued recovery, including in service lines particularly stressed by COVID-19 like pediatric care, and among Medicare activity. However, "it's still early to land on exactly what the recovery is looking like," Hazen said. "We need a few more months to figure out exactly what that's going to be. But we're encouraged by March."
For the full year, HCA expects to bring in revenue between $54 billion and $55.5 billion, and adjusted earnings per share between $13.30 and $14.30.
A key area of focus for the operator moving forward is in post-acute care, according to management.
COVID-19 accelerated the shift of more care being delivered in the home, sending hospitals scrambling to ink partnerships and snap up home health providers to make up for flagging inpatient volumes. HCA is no different, agreeing in February to pay $400 million for an 80% stake in hospice and home health business Brookdale Senior Living.
HCA discharges about a quarter of a million patients a year into the post-acute care system, and is looking to keep them (and the revenue they generate) under the HCA umbrella. "We see a nice, broad opportunity," Hazen said.