- Two major for-profit hospital operators, Hospital Corporation of America and Community Health Systems, announced robust earnings for Q1 2015. HCA's Q1 revenues increased 9.5% to $9.676 billion and Community Health Systems increased 17.6% to $4.911 billion.
- Thanks in part to the largest year-over-year patient volume growth for any quarter over the last 10 years, the HCA board also announced plans to increase its 3-year capital plan by $500 million to cope with the additional admissions and ED visits.
- Community Health Systems' increased revenue reflects benefits from the 2014 acquisition of Health Management Associates. The hospital operator also reported higher admissions and lower uninsured rates.
These are the two biggies—CHS is the largest hospital operator in the country by actual hospital count, while HCA is the biggest by revenue. It looks like analysts were right about the ACA's positive impact on for-profits, which are benefiting from an increase in patient volumes and a better payer mix.
"We are especially encouraged by improved volume in the quarter, demonstrating the results of our strategic growth initiatives and the incremental benefits of the ACA," Wayne T. Smith, chairman and CEO of Community Health Systems, said in a statement. "We remain optimistic that these positive trends will continue as a result of growth in exchange enrollment."
In general, for-profits are poised to have a strong year. Megan Neuburger, an analyst at Fitch Ratings who covers the for-profit sector, told Modern Healthcare that over the past year, management teams at investor-owned chains kept a tight rein on expenses and were conservative with how they managed capital. She also said that the for-profits had a tendency to make smaller investments and refinance higher-interest debt instead of pursuing blockbuster mergers, which had a positive effect on their credit ratings.