HCA Holdings plans to spend $2.7 billion this year to expand and improve facilities in its 42 markets, CEO Milton Johnson told investors Tuesday at the UBS Global Healthcare Conference in New York.
Johnson said HCA sees steady growth ahead and it's a good time to build out the delivery network around the company's 168 hospitals.
Nashville-based HCA has been investing in outpatient clinics, urgent-care centers and free-standing emergency departments to provide access to patients in settings that are right for their needs, he said.
For example, HCA has 56 free-standing emergency departments compared with 44 a year ago, Chief Operating Officer Sam Hazen said this month. That is expected to grow to a total of 70 over the next 12 to 18 months.
Johnson told the investors Tuesday that HCA would continue to focus on smaller, complementary acquisitions rather than “needle-moving” hospital deals.
HCA's capital expenditures last year were $2.4 billion or $300 million less than the company expects to spend in 2016. One of the more prominent deals completed last year was the acquisition from Urgent Care Extra of 14 urgent-care centers and six under development in the Las Vegas area.
Johnson said HCA's investment in facilities and medical offices is keeping admissions, emergency room visits and surgical procedures on the rise. Surgical volumes have increased system-wide for 12 consecutive quarters, he said.
HCA's 2015 revenue of $39.7 billion makes it the largest hospital company by revenue in the U.S.
Hazen, who joined Johnson at the UBS program, said HCA is trying to keep supply costs in check by standardizing products wherever practicable.
Progress has been made in the surgical suites on that score, Hazen said. And HCA expects to redouble those efforts to get the best deals on pharmaceuticals and for products used in the cardiac-catheter labs, among other departments.
Johnson said HCA has locked up 75% of its managed-care contracts for 2017 and nothing radical is in the offing on reimbursement rates from either government or private payers.
The at-risk portion of pay-for-performance metrics in most contracts is about 1% of the typical 4% annual increase in rates that HCA sees, he said. Payments based on readmission-rate reductions and other quality metrics typically are not built into base rates, he said.
Johnson said the recent $750 buyback of shares owned by Kohlberg Kravis Roberts & Co. was a signal to investors that HCA is willing to return earnings to shareholders.
He said HCA still has $1 billion of a $3 billion buyback authorization available and HCA intends to spend that money in the coming months.
