Image by Mariakray from PixabayOutpatient surgery volume across HCA Healthcare’s (NYSE: HCA) ambulatory network declined slightly in the second quarter of 2024. The number of individual surgery centers in the hospital system’s portfolio was down on a year-over-year basis as well.
But from a revenue perspective, total growth for HCA Healthcare’s outpatient surgery business was solid last quarter. What’s more, the slight dip in outpatient surgeries was partly attributable to the unique circumstances around Medicaid redeterminations, according to HCA CEO Sam Hazen.
That bigger picture has the Nashville, Tennessee-based company feeling bullish around its ambulatory surgery center (ASC) strategy heading into the second half of 2024 and beyond.
“Our overall revenue growth in our ASC and hospital outpatient surgery platform was up,” Hazen said Tuesday during HCA’s second-quarter earnings call. “Our profitability on that segment was up. And yes, we have a volume metric that’s down, but the implications to our business really aren’t there as a result of it.”
As of June 30, HCA operated 188 hospitals and about 2,400 ambulatory sites of care, a figure that includes ASCs, freestanding emergency rooms, urgent care centers and physician clinics. HCA’s footprint stretches across 20 U.S. states plus the United Kingdom.
On the ASC side, HCA had 123 freestanding outpatient surgery centers at the end of the second quarter. That’s three fewer centers than in the prior year’s same period, according to company financial filings.
Specifically, HCA’s same-facility outpatient-surgery volume in Q2 was down by 2.1% compared to the same quarter in 2023. Volume declines on outpatient surgery were “pretty much 100%” linked to Medicaid and uninsured self-pay patient categories.
“I mean, there’s a thesis inside of our company – it’s not proven yet – that patients who migrated from Medicaid into the exchanges through the redetermination process may be in a different seasonality category with respect to when they access services,” Hazen explained. “That’s a theory we have.”
While surgery volume was down, same-story ASC revenue growth was about 8% in 2024’s second quarter.
“I think it’s important to understand that the revenue growth – the service level growth that we’ve seen in our outpatient surgery business – has been solid and produced a pretty good financial outcome for the company,” Hazen said. “And if, in fact, our thesis is accurate, it should be better in the second half of the year than the first half of the year.”
HCA’s total revenue in the second quarter of 2024 totaled about $17.5 billion, compared to $15.9 billion in the second quarter of 2023.
Sticking to what works
ASCs are just one part of HCA’s overall health care strategy, which is largely focused on building density in existing markets.
When paired with a macro-economic environment that’s not exactly conducive to dealmaking, HCA leaders aren’t aggressively hunting M&A opportunities or expansions into new geographies, Hazen suggested.
“Will we enter new markets? Hopefully, yes, but those opportunities haven’t necessarily presented themselves,” he said on Tuesday’s call. “I don’t know that we’ll deviate from our model. Our model is more centered on making our system, our local system, work better – work better for the community, work better for our patients and work better for other stakeholders that are connected to it.”
Instead of M&A, HCA Healthcare will likely deploy its capital by upgrading existing infrastructure and investing in technology.
“We are investing more in our technology agenda because we see opportunities for it to support the company’s next-generation growth and allow us to serve our patients even better,” Hazen said.
In total, HCA plans to invest roughly $5.2 billion back into the company, which is “significantly up over the last couple of years,” the CEO noted.
