HCA Florida Southwood Emergency in Tallahassee. Photo: The Bushranger, Wikimedia Commons, CC BY-SA 4.0. Image resized.
HCA Healthcare said Tuesday that a shift toward uninsured patients, primarily people who lost coverage through health insurance exchanges, reduced third-quarter pretax income by about $400 million, even as more patients came through its hospitals and emergency rooms.
The hospital operator reported revenue of $19.849 billion, up 3.6% from a year earlier, but net income attributable to the company fell 3.9% to $1.579 billion. The results show how losing insurance coverage can affect both the families seeking care and the hospitals that provide it.
HCA described the change as a shift in payer mix, the combination of private insurance, government coverage and uninsured patients behind its revenue. Its $400 million estimate is the effect on the company’s income before taxes, not a tally of bills charged directly to patients.
More emergency visits, fewer surgeries
At comparable facilities, hospital admissions increased 2.7% and emergency room visits rose 5.1%. Equivalent admissions, a measure that accounts for inpatient and outpatient activity, increased 3%.
The growth was not uniform. Same-facility inpatient surgeries fell 1.4%, while outpatient surgeries declined 3.7%. Revenue per equivalent admission increased just 0.6%.
Those figures give a more detailed picture than revenue growth alone: patient activity increased, but the types of care and the sources of payment also changed. HCA did not provide a count in its release of how many patients had lost exchange coverage.
Coverage losses enter the earnings picture
HCA said its full-year outlook takes into account the estimated effect on health insurance exchanges of administrative reforms and the expiration of enhanced premium tax credits. The company identified federal policy changes as a challenge in Chief Executive Sam Hazen’s statement accompanying the results.
The earnings release links the increase in uninsured volume primarily to people losing exchange coverage. It does not assign the entire $400 million impact to any single policy change, and it does not establish how every affected household lost its insurance.
Despite that pressure, HCA said it improved costs, saw faster growth in equivalent admissions and insured revenue per equivalent admission excluding Medicaid supplemental payment programs, and received a modestly higher net benefit from those programs.
The company now expects full-year operating results in the upper half of the guidance ranges it issued in July. That is a stronger expectation within its existing ranges, rather than an announcement of entirely new ranges.
Per-share earnings rise while total profit falls
Diluted earnings rose to $7.27 a share from $6.96 despite the decline in total net income. HCA spent $2.97 billion buying back 7.23 million shares during the quarter.
Adjusted earnings, which exclude certain items, were $7.22 a share, up from $6.96 under the company’s adjusted comparison. Reported results included $13 million in gains on facility sales, or five cents a share, compared with $2 million in losses on facility sales a year earlier.
Adjusted EBITDA, a non-GAAP profit measure, increased 1.2% to $3.918 billion. Operating cash flow totaled $4.461 billion, and capital spending excluding acquisitions was $1.357 billion.
HCA operated 189 hospitals and approximately 2,600 ambulatory sites of care at September 30, including surgery centers, freestanding emergency rooms, urgent care centers and physician clinics in 19 states and the United Kingdom.
The company declared a quarterly dividend of 78 cents a share, payable December 29 to shareholders of record on December 15. It ended the quarter with $908 million in cash and cash equivalents and $50.493 billion in total debt.
JBizNews Desk | Nashville
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