Demand for labor narrowed HCA's operating margin in the third quarter as the hospital chain's volume remained strong.
The Nashville-based hospital company continues to see growth in demand for acute care and reported an increase in hospital admissions during the third-quarter over the same period last year, according to an earnings preview released late Wednesday. Same-facility admissions increased 2.9%. Same-facility equivalent admissions, a measure adjusted for outpatient activity, grew 3.6%.
HCA's pretax income, however, declined by 1% even as its revenue increased 6.9%. Pretax income for the quarter was $921 million compared with $929 million the same quarter a year ago. Revenue for the quarter rose to $9.9 billion, compared with $9.2 billion in the third quarter the prior year.
Officials said the squeeze on its operating margin was the result of labor costs and a less favorable mix of payers.
“Labor costs increased as a percent of revenues to 46.9% compared to 45.7 percent in last year's third quarter,” the company said in a news release. “This increase was driven primarily by less productivity and a greater use of contract labor to fill staffing needs.”
HCA also reported an uptick in the uninsured last quarter. Company officials in August predicted the boost from expanded insurance under the Affordable Care Act's would fade.
The uninsured accounted for more of the company's same-facility admissions during the third quarter, 8%, compared with 7.3% the prior year.
HCA expects to report its complete results on Oct. 27.