ACA ex­pected to boost earn­ings

Modern Healthcare - - THE WEEK AHEAD - —Beth Kutscher

Uni­ver­sal Health Ser­vices will be the first hospi­tal chain to re­port earn­ings this week for a quar­ter that’s widely ex­pected to show that the Pa­tient Pro­tec­tion and Af­ford­able Care Act is im­prov­ing fi­nan­cial per­for­mance.

The King of Prus­sia, Pa.-based chain will re­port its sec­ond-quar­ter re­sults Thurs­day. LifePoint Hos­pi­tals will fol­low the next day.

Both chains al­ready have seen a boost from health­care re­form in the first quar­ter. LifePoint, the small­est pub­licly traded chain, re­ported a 14.9% in­crease in net in­come, with about a quar­ter of its pre­vi­ous self-pay pa­tients en­rolling in Med­i­caid or a pri­vate ex­change plan. UHS re­ported a 2% to 3% de­crease in unin­sured vol­umes, with mar­gins in its acute-care busi­ness im­prov­ing nearly 4 per­cent­age points to 19.8%. An­a­lysts in­ter­viewed in the lead-up to earn­ings sea­son said they ex­pect health­care re­form to have just a mod­est im­pact on vol­umes. But chains with op­er­a­tions in states that have ex­panded Med­i­caid are fore­cast­ing sig­nif­i­cant re­duc­tions in bad debt and char­ity care. That im­pact was al­ready be­ing felt in the first quar­ter and is only ex­pected to ac­cel­er­ate. Michi­gan re­cently launched its Med­i­caid ex­pan­sion for adults earn­ing up to 138% of the federal poverty level and is ex­ceed­ing its en­roll­ment tar­gets. That’s a par­tic­u­larly im­por­tant state for Dal­las-based Tenet Health­care Corp., which will re­port earn­ings Aug. 4.

HCA, the largest chain by rev­enue, last week pre­viewed a 12.2% in­crease in pre-tax in­come for the sec­ond quar­ter and raised its fi­nan­cial guid­ance for the year.

Com­mu­nity Health Sys­tems, the largest chain by hospi­tal count, is sched­uled to re­port its re­sults July 31.

Uni­ver­sal Health CEO Alan Miller

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