Dive Brief:

• Hospital operator Tenet Healthcare expects the expiration of more generous Affordable Care Act subsidies to lower its earnings growth this year by about $250 million.
• Still, Tenet’s expected loss is smaller than those of some of its peers, including HCA Healthcare, which last month said it expects to lose up to $900 million from the lapse of the enhanced tax credits in 2026.
• Excluding the ACA headwind and the impact of some Medicaid state supplemental payments, Tenet anticipates it will grow adjusted earnings before taxes and other non-operating expenses by about 10% this year compared to 2025, executives said on a Wednesday call with investors.

Dive Insight:

Health systems have been trying to quantify just how dramatically the loss of the enhanced ACA tax credits is going to hit their facilities in 2026.

The subsidies expired at the end of 2025, causing premiums for beneficiaries to more than double on average this year. Millions are expected to lose insurance as a result, leading to less revenue and more uncompensated care for U.S. providers.

Large health systems like Tenet, which operates about 50 hospitals and over 600 other facilities across the country, could see multi-million dollar impacts.

Exchange admissions represented 7.5% of Tenet’s total admissions in the fourth quarter, the system said in financial results published Wednesday.

The hospital operator expects ACA enrollment will fall 20% this year, and 10% to 15% of those people will transition to alternate forms of coverage. The figures are similar to expectations from peers like HCA.

Still, executives at the Dallas-based operator said they’re implementing an expense management plan that should help mitigate the impact of falling ACA volumes.

The plan, which includes deploying automation technologies and artificial intelligence in the company, will also help Tenet prepare for more headwinds coming down the pike from healthcare cuts enacted in the GOP’s “One Big Beautiful Bill.”

“The thought process behind those isn’t just about 2026, it’s about being prepared for the years ahead,” CEO Dr. Saum Sutaria said on the Wednesday call.

Tenet reported $1.4 billion in net income last year, down from $3.2 billion in 2024, when the operator logged a $2.9 billion gain from hospital divestitures.

Still, the operator’s adjusted earnings — which companies say is a better measure of core operational performance — rose 14% year over year to $4.6 billion.

Tenet’s high-acuity portfolio boosted its earnings last year, according to Sutaria. The operator has made investing in service lines treating complex patients that require more specialized care a priority as it looks to increase margins.

Treating those patients, which tend to come with higher reimbursement, helped offset relatively flat volumes in Tenet’s hospital segment. Same-store adjusted admissions grew 1.2% last year compared to 2024, but same-store revenues per adjusted admission increased 5.3%, executives said on the call.

Tenet’s ambulatory services business, United Surgical Partners International, also boosted its 2025 earnings thanks to admissions growth, increasing its adjusted earnings before interest, taxes, depreciation and amortization by 12% year over year.

This year, Tenet expects to net between $4.49 billion and $4.79 billion in adjusted EBITDA. The guidance range is wider than normal as the hospital operator due to the uncertainty surrounding the loss of the ACA tax credits, according to Sutaria.

Tenet expects strong performance at USPI to underpin its earnings growth this year, including due to tailwinds from the phasing out of Medicare’s inpatient-only list. The inpatient-only list, which requires roughly 1,700 medical procedures to be performed inside a hospital for Medicare beneficiaries, will begin phasing out this year.

This gives USPI more opportunities to perform more high-acuity spine and urology procedures, executives said.

Executives said they will continue to focus on growing USPI through new center openings and through M&A. The operator has its eye on a “strong pipeline” of acquisition targets this year to meet its $250 million annual M&A target for USPI, according to CFO Sun Park.

Tenet executives said they also expect to focus on preparing recently re-acquired revenue cycle management firm Conifer for future growth this year.

Tenet announced earlier this month it was regaining full ownership of Conifer from CommonSpirit. Executives said they were satisfied with the transaction, adding the post-tax present value for Conifer is around $1.1 billion.

“This was absolutely the right path to go down, in addition to getting complete control of the strategic future of Conifer,” Sutaria said. “We’re pleased with the outcome.”