ACA gets some credit for im­proved earn­ings

Modern Healthcare - - NEWS - By Beth Kutscher and John N. Frank

Oba­macare con­trib­uted to strong sec­ond-quar­ter earn­ings at two pub­licly traded hos­pi­tal chains.

HCA re­ported a 14.2% in­crease in sec­ond-quar­ter net in­come as it treated more pa­tients and im­proved its payer mix, thanks to in­sur­ance ex­pan­sion un­der the Pa­tient Pro­tec­tion and Af­ford­able Care Act.

About two-thirds of HCA’s earn­ings be­fore in­ter­est, taxes, de­pre­ci­a­tion and amor­ti­za­tion came from its core op­er­a­tions, with one-third from health­care re­form, as more pa­tients gained Med­i­caid or com­mer­cial cov­er­age, CEO Mil­ton John­son re­ported on an earn­ings call last week. The chain is now fore­cast­ing a 2% to 3% boost in ad­justed EBITDA from Oba­macare, an in­crease from its ini­tial 1% to 2% pro­jec­tion.

Af­ter a slow start, HCA saw a 7.8% in­crease in Med­i­caid ad­mis­sions—8.8% when ad­justed for out­pa­tient ac­tiv­ity— in the sec­ond quar­ter, Chief Fi­nan­cial Of­fi­cer Wil­liam Ruther­ford said. Med­i­caid ad­mis­sions in­creased only 1.4%—or

“We have al­ready re­al­ized the early ben­e­fits of health­care re­form ...with a de­cline in unin­sured ad­mis­sions.” WAYNE SMITH CEO COM­MU­NITY HEALTH SYS­TEMS

2.4% ad­justed—dur­ing the first quar­ter of this year.

In its four Med­i­caid-ex­pan­sion states, HCA saw a 32% in­crease in Med­i­caid ad­mis­sions on a year-to-date ba­sis, and a 48% de­cline in unin­sured vol­umes. The num­ber of unin­sured pa­tients de­clined 2% in its non-ex­pan­sion states. Over­all, HCA’s self-pay and char­ity-care ad­mis­sions de­clined 14.7%, Ruther­ford said, rep­re­sent­ing 6.8% of to­tal ad­mis­sions, com­pared with 8.1% of ad­mis­sions in the sec­ond quar­ter of last year.

Com­mu­nity Health Sys­tems also re­ported strong re­sults in the sec­ond quar­ter, thanks to its ac­qui­si­tion of Health Man­age­ment As­so­ciates and a re­duc­tion in unin­sured ad­mis­sions be­cause of the ACA, it re­ported last week.

The sys­tem’s sec­ond-quar­ter net in­come hit $42 mil­lion, com­pared with $30 mil­lion in the same pe­riod last year. Net op­er­at­ing rev­enues for the quar­ter reached $4.8 bil­lion, up from $3.2 bil­lion in the same pe­riod last year. “We have al­ready re­al­ized the early ben­e­fits of health­care re­form in the sec­ond quar­ter, with a de­cline in unin­sured ad­mis­sions and a mod­est shift in payer mix, and we ex­pect this trend to con­tinue with fur­ther ex­pan­sion of in­sur­ance cov­er­age,” Com­mu­nity Health Sys­tems CEO Wayne Smith said in an earn­ings re­lease.

The week be­fore, LifePoint Hos­pi­tals re­ported a 44.3% in­crease in in­come from con­tin­u­ing op­er­a­tions for the sec­ond quar­ter, and raised its fi­nan­cial pro­jec­tions for the full year, at­tribut­ing its re­sults in part to bet­ter-thanex­pected ben­e­fits from health­care re­form.

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