HCA's CEO thanked UnitedHealth and other health insurers for
their flexibility.
Executives from two huge health care delivery
companies — HCA Healthcare Inc. and Quest Diagnostics Inc. — say that the
COVID-19 pandemic has reduced U.S. use of different types of health care by
about 30% to 70%.
The executives say they expect pent-up demand
for care to increase volume in the second half of the year, but aren’t really
sure what to expect.
HCA runs 186 hospitals and about 2,000
other sites of care. It provides about 4% of U.S. staffed hospital beds,
according to data from Definitive Healthcare and the American
Hospital Association.
Quest is the largest single provider of
laboratory services in the United States. It accounts for about 9% of the U.S.
medical lab market, according to figures in a company presentation slidedeck
created in 2018.
Earnings
Company executives talked about the COVID-19
pandemic during conference calls the companies held to go over earnings for the
first quarter of the year with securities analysts.
HCA is reporting $698 million in net income
for the first quarter on $13 billion in revenue, compared with $1.2 billion in
net income on $13 billion in revenue for the first quarter of 2019.
Quest is reporting $106 million in net income
for the latest quarter on $1.8 billion in revenue, compared with $176 million
in net income on $1.9 billion in revenue for the year-earlier quarter.
HCA executives say their company has a great
deal of cash on hand and has a strong level of liquidity, or ability to come up
with the cash needed to meet obligations.
Quest says that, if current conditions keep
up, it might need to get flexibility from lenders to keep its current
“revolving credit facilities,” or corporate versions of credit cards, in place,
but that it’s confident that it will get that flexibility.
The World Since March
15
Executives from both company said their
companies’ conference calls that patient volume fell off a cliff in the middle
of March, after many state and local governments began making serious
preparations for a surge in hospital patients with COVID-19, reacting to an
influx of hospital patients with confirmed cases of COVID-19, and telling
people to stay in their homes, to keep people from giving each other severe
acute respiratory syndrome coronavirus 2 (SARS-CoV-2), the virus that causes
COVID-19 pneumonia, heart problems and kidney problems.
Patient volume is down partly because
hospitals reconfigured their operations, to prepare for a spike in the number
of COVID-19 patients who might need to be on ventilators; partly because
hospitals and physicians’ offices are trying to avoid many procedures, to
reduce the risk that patients and health care providers will give each other
SARS-CoV-2; and partly because patients themselves have been reluctant to run
the risk of contracting SARS-CoV-2 at a medical facility.
At Quest, for example, revenue growth was up
4% for the two-month period from Jan. 1 through Feb. 29, relative to revenue
for the comparable period in 2019; fell less than 10%, year-over-year, for the
first two weeks of March; plunged almost 40% in the third week of March; and
sank about 50% in the fourth week of March.
“So far in April, we have indications that
volume declines have stabilized in the 50% to 60% range,” Mark Guinan, the
company’s chief financial officer, said during the Quest conference call.
Company executives said they saw declines in
volume for a wide range of tests, including tests used to track cancer.
They said that they are preparing to launch a
testing program that should be able to process about 200,000 SARS-CoV-2
antibody tests per day, and the use of other types of tests should start to
recover.
“While there is uncertainty in the near term,
we look forward to gradually improving conditions,’ Steve Rusckowski, Quest’s
chief executive officer, said.
Rusckowski noted that the COVID-19 pandemic
may be creating opportunities to acquire small lab companies and handle lab
testing for hospitals that have been running their own labs.
Sam Hazen, HCA’s CEO, noted that HCA hospitals
have cared for about 5,500 patients with confirmed cases of COVID-19 so far
this year.
He said HCA is feeling, and may continue
to feel, the impact of COVID-19-related lockdowns on employment as well as the
effects of efforts to prepare for and handle patients with COVID-19.
Like Quest’s chief financial officer, HCA’s
CFO, Bill Rutherford, said patient volume fell off a cliff in mid-March.
Admissions to facilities that HCA owned both
this year and last year were up about 5%, year-over-year, for the period from
Jan. 1 through March 15, Rutherford said.
“Then for the last half of March, we saw an
approximate 20% decline in admissions as compared to the prior year period,”
Rutherford said. “Almost all of our key volume indicators reflected growth
through March 15, and contractions in the last half of March as compared to the
prior year period.”
In the last half of March, volume fell 30% at
emergency rooms, 20% for in-patient surgeries, and 30% for outpatient
surgeries, Rutherford said.
For April, volume has been down about 50% for
emergency rooms, 30% for inpatient admissions, 50% for inpatient surgeries, and
70% for outpatient surgeries, Rutherford said.
“We have started to see these volume declines
stabilize over the past week” Rutherford said.
Rutherford said he’s hoping volume might start
to recover in the second half of the second quarter — after around May 15.
Hazen, the HCA CEO, declined to talk about how
patient volume might look as the health care system starts to recover from the
current lockdowns and pandemic response.
“We don’t know what the full effect and the
damage to the economy are going to be,” Hazen said. “We don’t understand
clearly what the uninsured levels are going to be. And we anticipate the
effects to vary by market.”
Hazen said HCA also has to make sure that it
continues to have enough surge capacity to handle the possibility of a second
wave of COVID-19 cases.
Hospitals and Health
Insurers
Hospital executives and health insurance
company executives often have harsh words from one another.
But David Wichmann, the CEO of UnitedHealth
Group Inc. said last week, during his company’s first-quarter earnings call,
that UnitedHealth would take action to correct imbalances caused by
COVID-19-related disruption.
Hazen, HCA’s CEO, said during the HCA call
that he believed UnitedHealth “took a very significant leadership position” in
easing some of the usual health insurance claim review procedures and rules.
Other components of the health insurance
industry have also made changes that have helped make getting paid more
efficient, Hazen said.
“We will continue to work with them, I think
in a very collaborative way, to address issues that we have, as well as issues
that they have,” Hazen said.
Allison Bell, ThinkAdvisor's insurance editor, previously
was LifeHealthPro's health insurance editor. She has a bachelor's degree in
economics from Washington University in St. Louis and a master's degree in
journalism from the Medill School of Journalism at Northwestern University. She
can be reached at abell@alm.com or on Twitter at @Think_Allison.
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