Dive Brief:
- HCA reassured investors on an earnings call its Q3 challenges are one-time issues, despite a net income decline to $449 million from $518 million in the same period last year. The company pointed to an increase in labor costs and uninsured volume, with higher drug prices and legal costs from a lawsuit in Kansas City, MO.
- Nursing turnover increased 19%, which required contract labor and HCA's hospitals needed more nurses to handle higher patient volume, resulting in a 36% increase in contract labor costs.
- Although the chain had an increase in patient volume in all but one of its 14 domestic divisions, it saw a 13.6% increase in uninsured admissions - almost 75% from Florida or Texas, which have opted not to expand eligibility for Medicaid.
Dive Insight:
The company also reported $77 million in legal fees from a lawsuit with the Health Care Foundation of Greater Kansas City, which sued HCA in 2009, alleging the company did not fulfill its promised charity care and capital commitments at the hospitals it acquired from Health Midwest in 2003, according to Modern Healthcare. Although HCA settled for $15 million earlier this year, it plans to contest a judgment against it on the issue of capital expenditures. However, earlier this month, a circuit court judge ruled HCA is liable for pre-judgement interest from the date the lawsuit was filed.
Some analysts were concerned with HCA's weak third quarter, as previously reported in Healthcare Dive, saying it could indicate a slowdown from the initial ACA market surge. Yet, others maintained an optimistic outlook, stating the Q3 results were "part of a normal cycle."
However, during its investor call, company executives maintained confidence they are still seeing benefits from the implementation of ACA in line with their expectations, reported the Nashville Business Journal. The company reported increases in patient volume and revenue growth. Sam Hazen, COO, pointed to market share growth in almost 80% of HCA's market, indicating the company's strategy to invest in increased capacity is paying off.