Dive Brief:
- HCA Healthcare brought in $17.3 billion in revenue during the fourth quarter of 2023 — a 12% increase over the same period in 2022 — on increased demand for inpatient and outpatient services, executives reported during an earnings call on Tuesday.
- While the Nashville-based operator beat Wall Street’s income expectations, fourth quarter and full-year profits dipped compared with 2022, as HCA’s fraught first-quarter acquisition of staffing firm Valesco continued to pressure earnings.
- HCA also announced a C-suite shake-up. Chief financial officer and EVP Bill Rutherford is set to retire after a decade in the role, CEO Sam Hazen said. He will be succeeded by Mike Marks, HCA’s current SVP of finance, effective May 1.
Dive Insight:
HCA is the largest for-profit hospital chain in the U.S. At the close of 2023, HCA operated 186 hospitals and 124 freestanding outpatient surgery centers.
Executives said the operator will continue to expand this year. The company has over $2 billion of new capital projects scheduled to come online in 2024 that will increase capacity, and HCA has allocated an additional $5.1 billion to future capital spending, compared with about $4.7 billion spent in 2023, according to the CEO.
HCA’s freestanding emergency capacity in particular will “grow consistently” in 2024 and 2025 to meet rising patient demand for services, Hazen said.
Same facility admissions rose 3.1% in the fourth quarter compared with the prior-year period, and emergency room visits grew 2.1%. Surgical volumes slightly trailed behind, with both inpatient and outpatient surgery volumes rising 1% during the quarter.
Still, Hazen broadly celebrated Tuesday’s results, telling investors that the company had finished 2023 “better than expected across most dimensions” of the business.
Hazen acknowledged that surgical volume growth was “a little slower” this quarter, however he said annual volumes had trended in line with other metrices. For the full year, HCA’s same-facility inpatient surgeries increased 2% and outpatient surgeries were up 2.5% compared with 2022. There was nothing at a “structural level” that suggested surgical volume trends would slow moving forward, he added.
On the hospital’s labor agenda, Hazen said the company had cut physician fee expenses — which plagued for-profit operators in the third quarter — sequentially over the back half of 2023. HCA will continue to invest in its recruitment and retention initiatives in 2024 to ensure facilities are staffed up to meet growing demand for services.
“We are still at times in situations where all of our capacity is not open and available — and that's what generates the situations where we can't receive the patients that are coming through these... transfer centers,” Hazen said. “We think that will continue to get better in [2024] as we have capital coming online and as our hiring patterns continue to improve.”
Still, the operator cannot fully shake the lingering impacts of its first-quarter Valesco venture. HCA acquired 90% of Valesco during the first quarter of 2023 in a joint venture with Envision Healthcare. Since then, integrating physician staff into payroll has proved challenging.
The venture is projected to cost HCA $150 million in negative earnings before interest, taxes, depreciation, and amortization in 2023 and 2024, according to Hazen. HCA’s net income for the quarter was $1.6 billion, down from $2.1 billion in the same period last year.
The costs are incorporated into HCA’s projections for 2024, the executives said. HCA expects to draw in between $67.8 billion and $70.3 billion in revenue in 2024.
