HCA Healthcare Inc. said it expects a recovery in surgical procedures and emergency room visits to persist through the year as staffing for the nation's biggest hospital chain almost returns to its pre-pandemic levels to add more bed and surgical capacity.
The Nashville-based hospital giant, the parent company of Parkridge hospitals in Chattanooga, reported Friday better-than-expected results and raised its forecasts for 2023. The improved results boosted HCA's stock by 3.85%, or $10.43 per share, to a close Friday at an all-time high of $281.21 in trading on the New York Stock Exchange.
In 2022, a spate of resignations by health care staff due to pandemic-related fatigue forced hospitals to pay large premiums for new hires or to use contract labor. But HCA reported Friday that staffing levels are nearly back to pre-pandemic levels, helping to cut the use of costly contract workers.
"The company produced solid earnings that reflected strong demand for our services and improvements in our operating costs, in particular for contract labor expenses," HCA CEO Sam Hazen told industry analysts Friday during an earnings call.
HCA's adjusted earnings, excluding losses on sales of facilities, grew by nearly 20% to $4.93 per share. Hospital admissions grew by 4.4%, and emergency room visits grew by 10%, Hazen said.
The results topped Wall Street expectations. The average estimate of nine analysts surveyed by Zacks Investment Research was for earnings of $3.99 per share. HCA posted revenue of $15.59 billion in the period, also exceeding Wall Street forecasts. Nine analysts surveyed by Zacks expected $15.29 billion.
"These impressive trends in the first quarter appear to be setting HCA up for a stronger year than anticipated, and management has materially increased its outlook for 2023," Morningstar analyst Julie Utterback told Reuters news service.
In its quarterly earnings report, the company said it expects full-year earnings to be $17.25 to $18.55 per share, with revenue in the range of $62.5 billion to $64.5 billion.
Hazen said HCA hospitals are reducing instances of not being able to open all operating rooms due to staffing constraints.
"As our labor situation continues to get better, we think that will allow us to open up more surgical capacity, and we believe the demand in the market is still there," he said.
Hiring activity was up 19% in the first quarter compared with the fourth quarter of last year, helping HCA to cut its most expensive contract labor costs by 21% compared with last year.
"We continue to invest in our people through compensation programs, increased training and innovative care models," Hazen said.
Despite the improvement, Hazen said HCA still experienced some shortages that prevented its hospitals from using all of their capacity. But instances in which HCA could not accept patients from other hospitals because of lack of space or staffing dropped by 25% from the fourth quarter.
HCA's six Parkridge hospitals, rehabilitation facilities and clinics in the Chattanooga area collectively employ about 2,000 workers. Last year, Parkridge moved ahead of CHI Memorial in patient volume in the markets served by Parkridge to become the second biggest health care provider in Chattanooga behind only Erlanger Health System, according to new market President Chris Cosby.
Last year, Parkridge East Hospital completed a $9.8 million expansion of its women's services unit. The Birth Place at Parkridge East Hospital now offers 23 postpartum beds, nine labor and delivery rooms and a 22-bed Level III neonatal intensive care unit.
Parkridge Health System is planning to build a $16 million, freestanding emergency department in Soddy-Daisy and is also looking at expanding its main hospital in Glenwood, Cosby said.
— Compiled by Dave Flessner