ACA gets some credit for improved earnings
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.