Will hos­pi­tal firms top last year’s strong sec­ond-quar­ter earn­ings?

Modern Healthcare - - THE WEEK AHEAD - —Beth Kutscher

Pub­licly traded hos­pi­tal com­pa­nies this week will face a high bar to beat last year’s re­sults when they re­port sec­ond-quar­ter earn­ings.

It was in the sec­ond quar­ter of 2014 when chains be­gan to see the fi­nan­cial ben­e­fits from in­sur­ance ex­pan­sion un­der the Af­ford­able Care Act, an up­lift that con­tin­ued the rest of the year.

Uni­ver­sal Health Ser­vices will re­port its sec­ond-quar­ter re­sults Thurs­day and LifePoint Health will fol­low on Fri­day.

In­vestors will be watch­ing to see whether the chains can keep up last year’s mo­men­tum. Healthcare re­form has sent the na­tional unin­sured rate to his­toric lows, but that num­ber is ex­pected to level off and be­come the new nor­mal.

Yet if HCA’s earn­ings preview this month is any in­di­ca­tion, de­mand for healthcare ser­vices has not slowed. While HCA typ­i­cally has the strong­est vol­umes among its peers, it ex­pects to re­port a ro­bust 4.1% in­crease in same-hos­pi­tal ad­mis­sions, or 4.9% when ad­justed for out­pa­tient ac­tiv­ity. Pre-tax in­come rose 8.8%, while sec­ond-quar­ter rev­enue in­creased 7.2% year over year. HCA will host an earn­ings call for in­vestors on Aug. 5. ACA cov­er­age ex­pan­sion isn’t the only fac­tor driv­ing in­creased pa­tient vol­ume. Hos­pi­tals are see­ing the ben­e­fit of an im­prov­ing econ­omy, and chains in par­tic­u­lar have been more strate­gic about ex­pand­ing in prof­itable mar­kets and ser­vice lines.

“We had some strate­gies in ad­vance of the ACA that have re­ally shown to be very ef­fec­tive,” said Trevor Fet­ter, CEO of Tenet Healthcare Corp. The Dal­las­based chain will re­lease its re­sults af­ter mar­ket close on Aug. 3. Com­mu­nity Health Sys­tems will fol­low that same day.


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