HCA to return $6B in CARES Act funds, accelerated payments
October 08, 2020
HCA Healthcare said Thursday it plans to return all of the $1.6 billion in federal COVID-19 relief grants it received to offset COVID-19 losses as well as $4.4 billion in Medicare accelerated payments.
Nashville, Tenn.-based HCA fared well through the COVID-19 pandemic. The for-profit hospital chain said it took a conservative approach early on in the pandemic that is now allowing it to give back all of its share of the Provider Relief Fund grants it received through the Coronavirus Aid, Relief, and Economic Security Act.
HCA would have been required to repay the $4.4 billion federal loan it received in the form of Medicare accelerated payments, but it appears to be doing so much sooner than is required. Congress recently approved relaxed repayment terms that give hospitals more time to repay the money.
“As the initial immediacy of the emergency has passed, and with more information, and more experience managing our operations during the pandemic, we believe returning these taxpayer dollars is appropriate and the socially responsible thing to do,” HCA CEO Sam Hazen said in a statement. “Our focus will remain on supporting our patients, employees and physicians and continuing the vital role we play in the communities we serve.”
HCA also released a preview of its third quarter financial results, income before income taxes of about $950 million compared with $979 million in the prior-year period. Revenue is expected to be $13.3 billion, up from $12.7 billion in the third quarter of 2019.
HCA expects its adjusted earnings before interest, taxes, depreciation and amortization for the third quarter of 2020 will be about $2 billion, compared with $2.3 billion in the prior-year period. Adjusted EBITDA is a non-GAAP measure.
HCA’s same-facility admissions are expected to fall by 4% year-over-year in the third quarter, and same-facility equivalent admissions are expected to drop 9% in that time. Same-facility emergency department visits are expected to decline by 20%.
“What we have proven to ourselves as well as local leaders in Texas and Florida in particular, is that we can manage up during a surge and can manage down as we need to in order to accommodate what is going on in the community,” Hazen said during a Friday morning investor call, noting that outpatient surgeries are down 6% as procedures like endoscopies lag. “Our operational and organizational capabilities have been significantly enhanced, our technology capabilities from our IT and clinical teams have significantly advanced. So we have positioned ourselves better at this particular juncture than we were going into the pandemic on other measures that I think are going to be positive for us.”
HCA said it expects its same-facility revenue per equivalent admission to jump by about 15% in the third quarter of 2020 year-over-year, which the company attributes to higher patient acuity and favorable payer mix.
COVID-19 patients are sicker, which boosts revenue per admission, executives said. Also, higher-acuity cases are generally the first to return while fewer lower-acuity patients seek care.
“We don’t believe total joint pain has subsided because of COVID, we don’t think cardiac conditions have been resolved because of COVID, nor have back problems been resolved because of COVID,” Hazen said during a Friday morning investor call. “So we anticipate that the pain tolerance for some of those patients will reach a point where they reenter the system. What we believe has happened is that with less emergency room activity, some of the lower end medicine cases that we were having to manage previously are not showing up and that is influencing case mix and overall acuity—I don’t know if that will start to show up again or not.”
HCA’s profit jumped 38% year-over-year in the second quarter of 2020 to $1.1 billion, even during a quarter which elective procedures were largely shut down on the front end.
The organization’s ambulatory surgery center pipeline is more robust than it has been in many years, Hazen said during the call, adding that HCA will continue to invest in freestanding emergency departments and physician clinic expansions both organically and through mergers and acquisitions.
“HCA is built to be bigger,” he said.
Alex Kacik contributed to this report.