Speaking during a year-end earnings call with analysts last week, HCA President Sam Hazen said the hospital company will use a portion of its record $2.9 billion capital budget in 2017 to increase urgent-care locations from 72 today to 120 by the end of the year.
Nashville-based HCA expects to grow its free-standing emergency departments nationally to 80 “by the first part of 2018,” up 31% from 61 locations today, Hazen said. HCA is the nation's largest investor-owned hospital company, with 169 hospitals and 2016 revenue of $41.5 billion.
Hazen said competitors in its 14 markets are showing signs of slowing construction of free-standing emergency rooms. HCA, however, continues to build to relieve some of the volume pressures that HCA's hospital-based emergency departments are experiencing.
“Our capital spending is a direct reflection of the opportunities we see,” Hazen said. “If we don't invest and expand to add more capacity, then our growth will be limited.”
Free-standing EDs have come under fire recently because they often operate in affluent suburban areas. They're also proliferating. A study published in Health Affairs last October found 400 free-standing EDs in 32 states, with two to four times that many projected in the future. But only 15 of the 32 states required a physician to be on-site during all hours of operation and only 11 required a certified emergency physician on premises.
Critics fear they will turn away uninsured patients in emergency situations because they are not required by federal law to accept all patients for screening and stabilizing treatment regardless of their ability to pay.
The nation's largest independent operator of free-standing EDs, Adeptus Health of Lewisville, Texas, has seen its fortunes decline. In November, the company announced a surprise third-quarter loss on operations of $14.5 million and a cash crunch that required an emergency $57 million extension of its credit line and a preferred stock sale to see it through the crisis.
Adeptus, which owns 66 facilities, including 24 in joint ventures with hospitals, saw patient visits decrease 19% in its third quarter, while hospital-owned volumes jumped 39%.
The crisis led to the earlier-than-expected retirement of CEO Tom Scott and the installation of board member Gregory Scott as the interim CEO.
HCA also announced last week that it has paid $178 million to settle a 7-year-old lawsuit brought by the Health Care Foundation of Greater Kansas City for allegedly not spending all of a promised $450 million on capital expenditures for Kansas City hospitals it owns.
During the earnings call, HCA CEO Milton Johnson said the chain has spent about $1 billion for healthcare facilities in Kansas City over that time and was settling to put an end to the litigation.
For its fourth quarter ended Dec. 31, HCA posted net income of $1.1 billion on revenue of $11.5 billion compared with net income of
$738 million on revenue of $11.3 billion in the year-ago quarter. Same-facility admissions increased 1.5% in the quarter over the prior-year period.
The $2.9 billion in projected capital expenditures in 2017 is an uptick from the $2.76 billion spent in 2016.
Johnson said that level of capital spending could be adjusted if market conditions change. But he said he didn't see repeal of the Affordable Care Act coupled with some kind of replacement program having a material effect on HCA this year. The company derives about 2.7% of admissions from the ACA insurance exchanges.
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Dave Barkholz is Modern Healthcare’s Southern Bureau Chief stationed in Nashville. He covers hospitals, doctors, suppliers and governance across the Southeast. A winner of numerous national journalism awards, Barkholz started his career at Modern Healthcare in 1984 covering the investor-owned hospital companies. He spent the past 10 years in Detroit at Automotive News, a sister Crain publication.Follow on Twitter