Nashville-based HCA is concentrating on rounding out services in its core markets rather than waiting on big, elusive hospital acquisitions, senior managers said Thursday.
Speaking during an analyst call announcing record 2015 earnings, Chief Operating Officer Sam Hazen said HCA is increasing revenue and profit in growing markets like Dallas, Las Vegas and San Jose by investing in doctors, urgent-care centers and specialty medical units that offer a full continuum of care to communities.
Over the past several months, HCA has added three burn centers at its hospitals and opened a dozen trauma centers. At about 15 of its locations it also started offering a minimally invasive heart procedure known as transcatheter aortic valve replacement, Hazen said.
Supplementing that was the addition of 66 urgent-care centers, free-standing emergency rooms and medical clinics to the nearly 165 hospitals that HCA owns in 20 states.
The investment has yielded seven consecutive quarters of growth in surgery volumes across the company, said Chief Financial Officer Bill Rutherford. And Hazen added that 80% of HCA hospitals posted earnings growth last quarter.
For 2015, HCA posted net income of $2.1 billion, or $4.99 per diluted share, compared with $1.9 billion, or $4.16 per diluted share, the year before. Revenue last year totaled $39.7 billion compared with $36.9 billion in 2014.
“The company is very intentional about trying to drive more complex, high-acuity type services to our facilities,” Hazen said. “Our core strategy within our individual markets is to be able to offer all services to the patient.”
Finding hospitals to buy is a tougher go, said CEO Milton Johnson.
He said HCA has the financial flexibility, access to capital and a constant pipeline of opportunities for deals. But it takes a willing partner to get them done, he said.
And HCA, the country's largest hospital chain, is taking a disciplined approach to hospital acquisitions, refusing to grow through them just for the sake of size, Johnson said.
Instead, HCA has a 2016 budget for capital expenditures of $2.7 billion, which will provide the money to do the kinds of deals that provide a continuum of care in HCA's markets and allow the company to grow organically in those markets, Rutherford said.
The company's earnings and revenue guidance in 2016 accounts for no major hospital acquisitions. HCA said revenue this year is expected to range from $41.5 billion to $42.5 billion and adjusted earnings per diluted share would range from $6 per share to $6.45.
“If it was just a matter of owning more hospitals, we could do that,” Johnson said. “But they wouldn't fit our profile and fit our long-term growth prospects and return prospects that we're looking for.”