- Operating margins at the three largest for-profit healthcare systems in the country — HCA Healthcare, Tenet Healthcare and Community Health Systems — have exceeded pre-pandemic levels for the majority of the COVID-19 pandemic, according to a report out Monday from the Kaiser Family Foundation.
- HCA and Tenet in particular have had high operating margins of at least 10% and at least 5%, respectively, in nine out of 11 quarters.
- CHS’ operating margins have been less than 5% in nine out of 11 quarters, though still exceeding pre-pandemic levels for most of the COVID-19 crisis, according to KFF.
While other recent reports have pointed to declining operating margins for operators facing heightened expenses amid record inflation and staffing shortages, KFF’s analysis suggests some major for-profit systems have been mostly unaffected.
HCA, Tenet and CHS are the three largest for-profit health systems in the country, together accounting for about 8% of community hospital beds in the U.S. in 2020, according to the report.
Operating margins in KFF’s report reflect the profit margins earned on patient care and other operations, and include COVID-19 relief funds. They exclude income taxes and nonrecurring revenue and expenses like facility sales.
Over the course of the pandemic, HCA has fared the best, with operating margins of at least 10% during the majority of the pandemic, or in nine out of 11 quarters, according to the report.
That means revenue exceeded operating expenses by at least 10% for the chain for most of the pandemic.
During the first two quarters of 2020, HCA and Tenet dipped below 2019 operating margins. CHS did, too, in the first quarter of 2020, then again in the second quarter of 2022.
Ultimately, as of Q3 of this year, HCA’s operating margins were 11.4%, Tenet’s were 8.4%, and CHS’ were 1.2%, according to the report.
CHS did have lower margins than the other systems prior to the pandemic, the KFF report noted.
Those chains’ stock prices have also fluctuated widely throughout the pandemic.
Stock prices rose dramatically during the first two years of the pandemic, and at their peaks, HCA’s stock price rose by 88% relative to January 2020, while Tenet’s rose by 154% and CHS’ rose by 383%.
This year stock prices took a hit, with HCA and Tenet’s up 45% and 1%, respectively, compared to January 2020, as of Nov. 8. CHS’ stock price was down 11.5% since January 2020.
HCA’s stock price rose by a greater amount than the S&P 500 during that period, the KFF report said. The S&P 500 slightly outperformed Tenet stock and significantly outperformed CHS stock in that time.