Hospitals, Policy

What a restart will mean for HCA’s hospitals

Facing a financial crunch from the Covid-19 pandemic, HCA Healthcare executives shared their plans for reopening as restrictions on elective procedures are lifted

Like its peers, HCA Healthcare has taken a significant blow from the Covid-19 pandemic. The Nashville-based hospital giant saw its net income drop by 44% to $581 million in the first quarter and expects to be hit even harder in its second quarter results.

While hospitals have faced costs in preparing for the pandemic, the bigger hit has come from cancelled elective procedures. HCA said it saw a 20% decline in admissions in the last half of March compared to 2019, and that patient volumes across most of its services were “significantly impacted” in the last two weeks

It’s difficult to predict what the rest of the year will look like for HCA. The company withdrew its earnings guidance for 2020. As it looks to the coming months, HCA is coming up with a plan for how to restart its services.

William Rutherford, HCA’s CFO, said he sees this process in three phases: response, restart and recovery. For now, the company is still in the process of responding to the threat of Covid-19 and treating sick patients.

“We then see moving to the restart phase as governmental restrictions on elective procedures are lifted, as we work with our affiliated physicians on clinical and operational protocols, and hopefully, as we begin to see some reduction of COVID-19 activity,” he said in an earnings call.

Healthcare facilities are just beginning to think through what that process will look like. Earlier this week, the Centers for Medicare and Medicaid Services published some considerations for hospitals and practices before they begin to offer elective procedures, including seeing decreasing cases in their communities for at least two weeks, having robust testing in place for healthcare workers, and ensuring adequate amounts of equipment, medications and other needed supplies are in place.


Some states already reopening

What that will look like for HCA will depend on the state. Two of its major markets, Texas and Tennessee, have been talking about plans to reopen. Texas recently moved to allow non-essential health procedures and Tennessee announced stay-at-home orders will end on April 30. Other states, including Georgia, Florida and Colorado, plan to reopen some businesses before the end of the month.

“In many of our markets, the initial forecasts were sobering — to be honest with you — and they have come in significantly less. So we have ample capacity, and we’ve learned a lot over this past five or six weeks, and that’s what we shared with the different governor’s offices,” HCA CEO Sam Hazen said in an earnings call. “We’re excited about the reopening in Texas. We’re excited about Tennessee, and we anticipate other states starting to relax some of these procedures and policies, just as we mentioned, over the course of the next few weeks, allowing us to start back on some of the care that’s needed in the community.”

Whether patients and physicians will be excited to come back is another question. Experts have warned that states that reopen too quickly, without adequate testing, could see a spike in Covid-19 cases. Ample protective equipment will also be needed to prevent asymptomatic transmission of the virus.

“With respect to our physicians, it’s mixed, as you would expect,” Hazen said. “Many of our physicians are eager to go and want to address their backlog. Others still have questions around patient safety, their own personal safety and how all of that is going to be managed.”

Hazen said HCA would bring on capacity in a conservative manner and work with physicians to see what they need to restart their practices. He expects to accomplish this second phase in most markets by the end of the second quarter.


Financial outlook

There are still too many factors in play for HCA to calculate its outlook for 2020, executives said. One of them is insurance. With 22 million Americans now unemployed, how many will hold onto their old plan through COBRA, and how many will opt to enroll in Medicaid or individual plans sold in the exchanges? How many will simply become uninsured? These could all affect how much HCA is reimbursed for care.

In the meantime, HCA has taken other steps to shore up its finances. The company suspended stock buybacks, reduced certain planned capital expenditures and recently reached an agreement where it could access up to $2 billion in loans, if needed.

The company also said it has taken certain steps to reduce costs. HCA hasn’t cut or furloughed any of its staff, but 80,000 employees are working reduced hours and 11,000 corporate staff took pay cuts. HCA also anticipates it will receive $4 billion in accelerated Medicare payments.


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