HCA Healthcare isn’t convinced that the COVID-19 omicron variant is done with it, the for-profit health system’s chief executive said on an earnings call Thursday.
During the fourth quarter, 5% of patients admitted to its 182 hospitals had COVID-19, the Nashville, Tennessee-based health system reported. That’s significantly lower than the 13% of admissions recorded during the previous three months, but those 27,000 patients were still enough to put a damper on fourth quarter earnings, which fell below Wall Street analysts’ estimates.
HCA Healthcare anticipates its COVID-19 volume will decline in the coming weeks, but still expects 3% to 5% of admissions this year will be patients infected with the novel coronavirus, CEO Sam Hazen said.
HCA Healthcare generated $15.1 billion in revenue in the fourth quarter, up 5.4% from the prior-year period, and full-year 2021 revenue grew 14% to $58.8 billion.
The health system’s net income rose 28.6% to $1.8 billion in the fourth quarter while full-year profit grew 85% to almost $7 billion. Earnings before income, taxes, depreciation and amortization were $3.1 billion in the fourth quarter, up less than 1%, while full-year EBITDA increased 26%.
HCA Healthcare expects revenue to reach $60 billion to $62 billion this year and projects $5.8 billion in profit, a decline from 2021.
HCA’s share price dipped sharply Thursday morning on the underwhelming financial results but rebounded and closed at 4.7% below than the previous day’s close. That compares to a 0.02% decline in the Dow Jones Industrial Average and a 0.14% increase in the S&P 500 Health Care index, which includes HCA Healthcare.
The crush of COVID-19 cases led to a 1.2% decline in inpatient surgeries on a same-hospital basis during the fourth quarter. Orthopedic surgeries moving to outpatient settings was a related factor, Hazen said. Patients reluctant to visit hospitals during the pandemic have accelerated a shift from inpatient to outpatient care.
The pandemic also robbed HCA Healthcare of its customary end-of-year volume bump, Hazen said. Volume will pick back up early this year as patients who delayed care in 2021 return, he said.
Workforce issues also diminished HCA Healthcare revenue, Hazen said. “We had surgeons who were closing practices [and] canceling cases because they themselves contracted the omicron variant,” he said.
Like its peers, HCA Healthcare continues to spend more on labor because of the pandemic and the resultant need to hire expensive travel nurses. Employee compensation rose 12.2% in the fourth quarter, which was twice the overall rate of cost increases. The health systems continues to boost pay, bonuses and benefits but likely will cut back on contract workers in the second half of the year, Hazen said.
HCA Healthcare benefited from about $900 million in COVID-19-related government aid last year. Of that, more than $400 million came from the Health Resources and Services Administration, $200 million resulted from delaying Medicare cuts under budget sequestration and about $180 million came from Medicare’s add-on payment for treating COVID-19 patients, Chief Financial Officer Bill Rutherford said during the investor call. The company projects government support will fall to $150 million this year.
HCA Healthcare is struggling to discharge COVID-19 patients to post-acute facilities, Hazen said. Often, those rehabilitation and nursing facilities can’t accept patients because they’re dealing with the same staff shortages as hospitals. Universal Health Services Chief Financial Officer Steve Filton cited the same challenge at the J.P.Morgan Healthcare Conference this month.
As the pandemic lingers, hospitals will continue to struggle with how to appropriately triage coronavirus patients while maximizing profit, said Natalie Schibell, a senior analyst at Forrester Research. Shifting that care into homes whenever possible will be crucial, she said. “Hospitals that aren’t adapting to this model—they’re not going to succeed.”