HCA plans on $5 billion in capital spending this year
Q4 net income attributable to HCA Healthcare was $1.607 billion compared to $2.081 billion during the same quarter in 2022.
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HCA Healthcare plans on making $5 billion in capital investments this year, with a large concentration in outpatient facilities.
"I will tell you we do have a large development pipeline of new outpatient facilities that are connected to our capital project in 2024 and 2025," CEO Sam Hazen said during Tuesday's earnings call. "We'll have quite a few come online, a little bit more than we had in 2023 and 2022. We do have some new hospitals in a few markets that will come online."
HCA is also starting to invest in other markets, he said.
"There is growing occupancy on the inpatient side, and then we have opportunities in the outpatient side to expand our networks further in these fast growing communities," Hazen said.
Allocations between inpatient, outpatient and technology will be consistent with past years, Hazen said. Consistent allocation of capital has yielded strong returns, he said.
"It's allowed us to meet the demand expectations that exist in the market, and it's also responded to our physicians in a way that created the capacity or allowed for the clinical technology that they need to practice their medicine."
These investments revolve around three opportunities that Hazen outlined.
The first is network expansion in facilities, services and workforce, with over $2 billion of new capital projects scheduled to come online that will increase capacities.
The second opportunity includes a robust agenda designed to advance digital capabilities across the company, Hazen said. Among other benefits, this will improve the company's overall operational management capabilities, including integrating revenue cycle and case management functions better.
The third area is to invest heavily in the business and people while also allocating capital to shareholders.
"In 2024, we plan to increase capital spending to over $5 billion and enhance our share repurchase program to around $5 billion," Hazen said.
WHY THIS MATTERS
HCA finished 2023 better than expected across most dimensions of the business, Hazen said.
Reported Q4 net income attributable to HCA Healthcare was $1.607 billion compared to $2.081 billion during the same quarter in 2022.
In 2024 net income attributable to HCA Healthcare is expected to range between $5.2 billion and $5.6 billion.
The volume of beds coming online in 2024 is about the same as in 2023. ER capacity is growing consistently.
There is strong demand for services coupled with improved cost trends, according to the earnings call.
Admissions grew 3% year-over-year, equivalent admissions were up 4%, emergency room visits grew 2% and inpatient and outpatient surgery volumes increased approximately 1%.
"These factors, along with certain enhancements in a couple of states' Medicaid supplemental programs helped produce same facilities revenue growth of 11% in the quarter," Hazen said.
There's been high Medicare utilization, as reported in financials from the Medicare Advantage insurers, though Hazen said HCA experienced "normal seasonality" with respect to most categories in the business.
CFO Bill Rutherford said Medicare volume has been a topic of discussion.
"We have seen some growth in our Medicare Advantage admissions, which were roughly up 10% in the quarter, which is pretty consistent for what we've seen throughout the year," Rutherford said.
This could be the result of a combination of conversion from traditional Medicare fee-for-service as well as volume gains and utilization.
"It's hard for us to break that down in its entirety," Rutherford said.
Revenue per unit between Medicare Advantage and Medicare has been very consistent through the year, Rutherford said.
The fourth quarter had the strongest operational performance of the year, he said.
THE LARGER TREND
Rutherford is retiring after 34 years with the company. He has spent the last 10 years with HCA as CFO.
Mike Marks has been announced as the next CFO.
Marks has been with the company for 28 years. He served as the National Group's CFO for 10 years and has been in the senior vice president and financial operations role for the last few years.
Email the writer: SMorse@himss.org
