HCA beats expectations, bullish on inpatient facilities
- HCA Holdings beat market expectations, reporting $11.56 billion in revenue for Q4 2017, an 8.6% increase over Q4 2016.
- The hospital operator reported a 2.4% increase in the company's admission rate for FY 2017. The company remains bullish on inpatient beds, adding nine hospitals and 2,448 licensed beds to its portfolio in 2017.
- HCA, which owns 179 hospitals, saw inpatient revenue per admission increase 3.6% in 2017.
Overall, HCA had a good year, financially speaking. Revenue for 2017 totaled $43.61 billion — compared to $41.49 in 2016 — and adjusted EBITDA for 2017 increased to $8.23 billion, compared to $8.21 billion in 2016.
Wall Street is taking note. The company’s stock hit an all-time high during mid-morning trading hours on Tuesday. Many health companies fell amid news that heavyweights Amazon, Berkshire Hathaway and J.P. Morgan will work together to drive down healthcare costs for their staff.
The biggest publicly-traded hospital company's report is the first for the sector this quarter.
HCA said that the GOP tax bill will increase 2018 adjusted earnings by about $500 million due to a decrease in its corporate income tax rate.
CEO Milton Johnson on the investor call said HCA is investing in career growth for its employees including tuition reimbursement, scholarships, an expanded family leave program and other education programs.
HCA also said it plans to deploy 100,000 iPhones as part of its tech agenda, with Johnson mentioning the phrase “artificial intelligence” on the call.
HCA is still full-steam ahead with inpatient care settings. Though the company did state in Q2 it was exploring where lower-acuity business could fit into the system, HCA continues to invest in more inpatient assets.
President and COO Samuel Hazen on the call said the biggest component of company spend is on inpatient settings. “Outpatient is unlikely to supplant inpatient spend,” he said.
The company does plan to add more outpatient facilities, expecting to add around 200 outpatient facilities in the coming years. Hazen shared HCA expects to open 15-20 urgent care centers in 2018.
The company added only two freestanding outpatient surgery centers to its portfolio in all of 2017, for a total of 120. Inpatient surgery cases increased at a faster rate than outpatient surgery cases for the year (1.7% vs. 0.3%).
For same facility rates, the same holds true. Same facility inpatient surgery cases increased 0.3% in 2017 while same facility outpatient surgery cases decreased 1.3%.
Urgent care utilization did increase by 10% and such centers increased from 80 to 123 urgent care centers, Hazen shared.
Still, he noted one of the company’s chief concerns in the coming years is to address inpatient capacity constraints. He stated HCA expects to add 2,000 inpatient beds in the next three years.
Hazen reiterated the company expects inpatient services to demand 2-2.5% annually due to population growth, utilization increase from baby boomers and growths both in chronic conditions and job economies.
The company released its 2018 guidance, projecting its revenue range to be between $45-46 billion and earnings-per-share to come in at $8.50 to $9 per diluted share.
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