HCA said last week that its volume figures for the second quarter would be weak, including a 3.6% drop in outpatient surgeries when compared with 2002's second quarter.
It's the second quarter in a row of soft volume data for Nashville-based HCA, and when taken with the mostly weak volume figures reported by other investor-owned hospital chains in the first quarter of 2003, it may signal that the admissions growth fueling an industrywide building boom is softening. Credit analysts have noted slowing and even falling admissions figures for not-for-profit hospitals, too (July 14, p. 14).
Lori Price, a healthcare stock analyst with J.P. Morgan Chase & Co., said volume for all hospitals figures to be weak for the three months ended June 30 because the economy was weak. Instead of hitting particular industries or regions, Price said, layoffs have been broadly based. That has fed a deeper anxiety among consumers than in past recessions, she said.
In addition, during the boom that preceded the downturn, the labor market was so tight that employers were adding benefits and absorbing all the cost increases of providing health insurance for employees, Price said. As a result, utilization was driven by employees who bore little of the cost. Now that copayments and deductibles are rising, she added, patients are putting off procedures they don't believe are urgently needed.
Price also said that the increasing willingness of physicians to walk off the job to protest malpractice awards is slowing volumes.
HCA also cited the economy and increased copays and deductibles for patients as big factors in the volume declines. Volume also was affected by the nonrenewal of the company's managed-care contract with Blue Cross and Blue Shield of Tennessee, the company said.
HCA said its same-facility admissions grew only 0.6% and outpatient surgeries declined 3.6% for the second quarter compared with the year-ago period. HCA broke the numbers down by month to show that April and May figures showed declines of 0.9% and 0.5%, respectively, while admissions increased 3.5% in June. The company also provided figures indicating that volume would have improved by about 1 percentage point if hospital units that have been closed were removed from 2002's figures.
HCA also said it would increase its allowance for bad debt by $106 million. While the company said it has made strides in collecting more quickly from insurance companies, higher numbers of uninsured patients and greater copays and deductibles for patients have combined to increase bad debt.