Hospital chains are reporting meager first-quarter earnings due in part to low patient volume and a weak U.S. economy operating at less than full employment, Reuters reported.
"It's still early in the reporting season, but so far it all points to softness. In the U.S., volumes at hospitals--in-patient and out-patient--are soft," David Heupel, senior healthcare analyst at Thrivent Investment Management, told Reuters.
For instance, HCA Holdings' preliminary first-quarter results showed a slowdown in admissions growth and weak outpatient volumes, the largest U.S. hospital chain announced last week.
HCA saw same facility admissions for the first quarter ended March 31 increase just 0.1 percent, compared to 3.2 percent a year ago. Meanwhile, same facility equivalent admissions dropped 0.7 percent, compared to a 4.8 percent increase the year before.
The Tenn.-based hospital chain said it began adjusting its cost structure during the first quarter to counter weak patient volumes.
Similarly, Health Management Associates cut its full-year revenue outlook for 2013 and expects first-quarter earnings to miss analysts' expectations, Barron's reported.
The Florida hospital operator predicts adjusted admissions will decline 5.7 percent while admissions drop 8.8 percent, it announced earlier this month.
HMA attributed weak first-quarter admissions to lower uninsured inpatient utilization, along with a significant boost in observation stays, compared to the first quarter of 2012. Year-over-year, observation stays for the quarter increased by about 14.1 percent and observation stays longer than 48 hours jumped by more than 40 percent, according to HMA's preliminary results.
But for-profit hospitals shouldn't worry just yet. Industry analysts expect a similar pattern of healthcare consumption, in which weakness during the first six months of the year end up finishing strong, Reuters reported.
"People will consume healthcare services after they've met their deductibles, and so the fourth quarter will be strongest," Heupel said.
To learn more:
- read the Reuters article
- here's the HCA announcement
- here's the HMA announcement
- read the Barron's article