HCA Healthcare raised its earnings guidance for 2021 by $500 million thanks to a stronger than expected first quarter and the delay of Medicare sequester cuts.
HCA’s earnings report, released Thursday, shows revenues are up in the first quarter, generating $13.9 billion compared to the $12.8 billion in the first quarter of 2020. The system’s $1.4 billion in profit was up compared to the $581 million it generated in the same period in 2020.
“The first quarter is yet another period where the disciplined operating culture and strong execution by our teams were on display,” said HCA CEO Sam Hazen in a statement Thursday.
HCA reported adjusted earnings before interest, taxes, debt and amortization of $3 billion for the first quarter, compared with $2.2 billion in the first quarter of 2020.
The earnings come as HCA continues to face patient volumes below pre-pandemic levels.
“Same facility admissions declined 4.2% and same facility equivalent admissions declined 6.5% in the first quarter of 2021, compared to the prior-year period,” the company said. “Same facility emergency room visits declined 18.4% in the first quarter of 2021.”
However, a higher acuity of patients treated and a favorable payer mix have helped HCA offset the shortfalls in volumes.
“Same facility revenue per equivalent admission increased 16.6% in the first quarter of 2021, compared to the first quarter of 2020,” the company said.
HCA is the latest for-profit hospital to have a higher patient acuity offset lingering volume shortfalls. Tenet Healthcare also posted $97 million in profit for the first quarter thanks in part to higher acuity.
The strong first quarter helped to raise the earnings guidance from $54 to $55 billion. HCA is also projecting an adjusted EBITDA from $10.85 to $11.35 billion for 2021.
About $350 to $400 million of the $500 million earnings guidance raise was based on the first quarter’s performance. HCA is also projecting capital expenditures of $3.7 billion.
The remainder is linked to savings from a moratorium that pauses a 2% cut to all Medicare payments to providers and the likely extension of the public health period for the rest of the year, said Bill Rutherford, HCA’s chief financial officer during an earnings call Thursday.
“The margins clearly are being helped by both the acuity and payer mix and revenue per adjustment we are seeing,” said Rutherford. “We are continuing to look for as much efficiency as we can.”
Another positive factor has been the expansion of Affordable Care Act subsidies and the increase in signups from special enrollment periods, he added.