After battering the Bahamas as a Category 5 storm, a weaker but still destructive Hurricane Dorian is now marching toward the Southeastern U.S. with threats of strong winds and storm-surge flooding. For hospitals unlucky enough to be caught in its path, Dorian could also bring steep costs associated with disruptions in patient visits or facility damage.
Of the investor-owned hospitals, Tenet Corp. and HCA Healthcare are most likely to be affected by the hurricane.
According to research from Evercore ISI analyst Michael Newshel, 22% of Tenet's hospital beds are in coastal counties in Florida and South Carolina, with 10% of its beds in areas with evacuation orders.
Meanwhile, 15% of HCA's beds are in coastal counties in Florida, Georgia and South Carolina, including 8% in counties with evacuation orders, according to Newshel's latest research note published Monday night. Universal Health Services could also be affected to a lesser extent, as 8% of its behavioral health beds and 3.6% of its acute-care beds are in coastal counties in the four states.
Community Health Systems, Quorum Health and Acadia Healthcare have no exposure in the coastal areas, Newshel wrote.
Some past hurricanes have come with hefty price tags. Hurricane-related costs to hospitals usually stem from disruptions to patient volume as elective surgeries are canceled or hospitals are temporarily closed, but could also come from facility damage, Newshel explained in a phone interview with Modern Healthcare.
Tenet reported a $4 million hit to its adjusted earnings before interest, tax, depreciation and amortization in the third quarter of 2018 after Hurricane Michael struck the U.S. that October. In the third quarter of 2017, Tenet reported a $30 million impact to adjusted EBITDA due to lower revenue and higher expenses associated with hurricanes Harvey and Irma.
In response to a question about how Tenet works to minimize the financial impact of hurricanes, a company spokeswoman said in an email, "Being prepared for emergencies, responding quickly and rapid recovery are of the utmost importance to us. We remain vigilant about protecting our patients and caregivers and taking every precaution necessary to keep them safe."
Nashville-based HCA lost an estimated $31 million in revenue in 2018 directly related to Hurricane Michael's impact on its Florida facilities in the fourth quarter, according to its quarterly earnings report. The year before, HCA reported $140 million in additional expenses and loss of revenue from hurricanes Harvey and Irma's impact on its Texas, Florida, Georgia and South Carolina hospitals. Those estimates don't take into account any funds hospitals may recover from insurance.
A HCA spokesman said the hospital system's focus is not on the financials when it comes to hurricanes, but on the well-being of patients and colleagues.
"Since early last week, HCA Healthcare's enterprise emergency operations center in Nashville, a multi-disciplinary incident response team of nearly 200 leaders, has been activated and providing support to our hospitals that may be in the path of Hurricane Dorian," the spokesman said in an email. "Our preparedness activities include ensuring our hospitals have enough staff, medications, supplies, food, water and generator power to continue to operate and care for our patients during and after the storm."
Hurricanes Harvey and Irma in 2017 also affected CHS, resulting in a loss of operating revenue and with expenses related to hurricane response efforts totaling about $40 million, the Franklin, Tenn.-based chain reported during the fourth quarter that year. That year was unusual because two large hurricanes hit areas where CHS has a large concentration of hospitals; still, the hospital chain's emergency preparedness was "very effective" in 2017, a CHS spokeswoman said.
King of Prussia, Pa.-based UHS, meanwhile, reported a negative impact to its EBITDA of $5 million to $7 million in the fourth quarter of 2018 from Hurricane Michael and a $12 million to $13 million hit in 2017 from hurricanes Harvey and Irma, according to Newshel's research note.
While these losses might affect a hospital's earnings expectations for a quarter or two, they are unlikely to impact the bottom line long-term, Newshel said.
The federal government has declared public health emergencies in Florida, Georgia and South Carolina, which gives HHS more flexibility in how it meets health needs during disasters. The agency also sent 200 personnel and medical equipment and supplies to help respond to medical needs. In Florida, eight hospitals have so far evacuated patients, according to the Florida Hospital Association.