For-profit hospital revenues, earnings soar

As millions of Americans are added to the rolls of insured under the Affordable Care Act (ACA), the for-profit, publicly-traded hospital chains that care for them have gone on a roll of their own.

The ACA recently fattened the bottom lines of two big hospital chains: Universal Health Services, Inc. and LifePoint Hospitals Inc. Universal's revenue is up 10 percent in the second quarter of 2014 compared to the second quarter of 2014, while LifePoint's profit was up 44 percent compared to the year-ago quarter, the Wall Street Journal reported.

LifePoint attributed between $12 million and $13 million of its income for the quarter to newly insured patients under the ACA--far higher than the $7 million to $8 million that the company originally projected. 

The ACA helped cover as many as 15 million Americans, and the data seems to dovetail with the first overall increase in inpatient volumes since 2007, according to a recent survey by the investment bank Jefferies. Moreover, ACA-related health plan enrollees indicated they are sicker than the general population, likely requiring more hospital care.

Between one-third and one-half of Universal's revenue bump can be traced to an influx of newly insured patients under the ACA, Steve Filton, Universal's chief financial officer, told the WSJ.  He said that figure was up sharply compared to the first quarter of 2014, when new patients began to trickle in. The company's earnings were flat, although that was because a large chunk of the second quarter 2013 earnings was prior-year income being placed on the books late.

But Universal's hospitals admissions rose 3.6 percent on average compared with last year's quarter, while outpatient surgery volumes rose about 4 percent, the company said. The surgical volumes were the best since the Great Recession descended in late 2007, Filton said. Universal Chief Executive Officer Alan Miller told the WSJ it was the best quarter the company had had in a long time, and that the ACA-related growth was "hopeful."

To learn more:
- read the Wall Street Journal article (subscription may be required)

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