AdventHealth President and CEO Terry Shaw has big expansion plans for the organization, including billions of dollars in capital investment over the next few years and possibly acquisitions
In the past few years, AdventHealth has grown from an $11 billion system in 2018 into a $16 billion organization operating 51 hospital campuses and hundreds of care sites across almost 10 states. Shaw said the faith-based organization is fortunate to be in fast-growing states such as Colorado, Texas and its home state of Florida, which the U.S. Census Bureau in 2022 named the fastest-growing state for the first time since 1957.
The Altamonte Springs, Florida-based health system isn't slowing down. It is building a 98-bed hospital in Lenexa, Kansas, and will start construction on another at an unnamed location in Colorado. It also has two Florida hospitals coming online this year, in Palm Coast and Riverview, plus another scheduled to open in 2025 at Lake Nona.
“I’d like to open more than that,” Shaw said. “It will end up being about a hospital a year at least for the next seven years.”
AdventHealth will also soon take control of five hospitals in Colorado, as it winds down its Centura Health joint venture with Chicago-based CommonSpirit Health.
Shaw said AdventHealth is open to buying more hospitals if they are in the right markets. He hopes to grow AdventHealth into a $20 billion organization by 2025, with the system’s earnings before interest, taxes, depreciation and amortization, or EBITDA, margin bouncing back to a pre-pandemic-era 13% by the end of 2024.
“I’ve been in the business long enough to go through three cycles of, ‘Hospitals are going away,’ and they’re not,” Shaw said. “Do I still believe in hospitals? I do. Do I believe we’re going to be building more as the population moves? Yes, I do.”
Other health systems are plotting their own expansions. Sacramento, California-based Sutter Health plans to add more than two dozen ambulatory care centers in the next four years, in addition to dozens of primary and multispecialty care sites. Henry Ford Health is investing $2.2 billion to expand its main campus in Detroit -- the largest investment in its 108-year history.
AdventHealth's growth strategy includes expanding its outpatient operations, with plans to double its number of urgent care centers to more than 100, he said.
By the end of the year, AdventHealth will have 10 clinics serving seniors with complex health conditions, part of a business model designed to give doctors more time with those patients. The system said earlier this week it is selling off all 10 of its skilled nursing facilities and exiting that business.
AdventHealth puts about 75% of its EBITDA back into capital projects each year, giving the organization a roughly $4 billion budget to spend over a three-year capital cycle, Shaw said.
The system reported $400.3 million in net income in the first quarter, a big improvement from a $417.7 million loss in the year-ago period. It suffered a $837.9 million net loss for 2022.
AdventHealth grows its footprint in “concentric rings,” in contrast to other big health systems looking for cross-market opportunities, Shaw said. For those deals to work, he noted the combining organizations need to maintain a concentrated presence in their respective markets, similar to the former Advocate Aurora Health in the Midwest and Atrium Health in the Southeast, which merged into the multiregional Advocate Health in December.