ACA expected to boost earnings
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