HCA posts $2.2B profit after 'most intense surge' of COVID-19 in Q3, higher labor costs

Major hospital chain HCA Healthcare generated $2.26 billion in net income in the third quarter despite a massive surge of COVID-19 that caused the system to pause some surgeries.

The 183-hospital system’s revenues in the third quarter increased to $15.2 billion compared with $13 billion in the same period in 2020, according to HCA’s earnings report released Friday. HCA raised its financial outlook for 2021 thanks in part to the results.

“During the third quarter we experienced the most intense surge yet of the pandemic, and our colleagues and physicians delivered record levels of patient care to meet the demand caused by the Delta variant,” HCA CEO Sam Hazen said in a statement.

HCA saw its admissions increase nearly double digits, with same-facility admissions increasing 6.8% and equivalent admissions 9.3% compared to the third quarter of 2020. But inpatient surgeries declined 4.9% and outpatient surgeries also decreased 6.4% as hospitals were forced to cancel or postpone procedures to preserve capacity to fight COVID-19.

COVID-19 admissions helped fuel an increase in revenue due to higher acuity patients.

“Same facility revenue per equivalent admission increased 5.2% in the third quarter of 2021, compared to the third quarter of 2020, due to increases in acuity of patients treated and favorable payer mix in the quarter,” HCA said in its earnings release.

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Hazen said during an investor call Friday that inpatient revenue grew by 18% compared to the prior year and outpatient by 11%.

The system also touched on efforts to combat rising labor costs.

“Obviously in the third quarter we were dealing with a very intense COVID surge with very sick patients, and it was putting significant strain on our communities and our facilities,” Hazen said. “We used premium pay where we needed to, we used different levels of shift bonuses and overtime where we needed to.”

Hazen said the company is implementing a multipronged strategy to bolster its labor force, including expanding its nursing school to ensure a pipeline of nurses for the company.

“We advanced our benefits in many areas and are trying to create an environment where nurses try to do what they need to do,” he said.

The results prompted HCA to increase its 2021 guidance for the full year. It projects revenues of $58.7 billion to $59.3 billion and adjusted earnings before interest, taxes and depreciation of $12.5 billion to $12.8 billion.

HCA officials gave a glimpse of what to expect in 2022 as well. The system expects demand will return to more historical trends with volumes increasing overall by 2% to 3%, Hazen said.

COVID-19 admissions will still be an issue and will account for 3% to 5% of total admissions, compared to 9% this year.