HCA Beefs Up Capex Budget For 2024

Driven by strong admissions and revenue growth, HCA Healthcare Inc. leaders have increased their 2024 capital projects budget by approximately $500 million over last year to continue growing their network, particularly for services outpatients.

Nashville-based HCA plans to spend between $5.1 billion and $5.3 billion this year, up from $4.7 billion in 2023, on inpatient, outpatient and technology additions or upgrades. Speaking after he and his team reported fourth-quarter results:net income of $1.86 billion With more than $17 billion in revenue, CEO Sam Hazen had a simple message on capital spending: more of the same.

“We are pretty consistent in our capital allocation. It is not disproportionately targeted at any category of our business,” Hazen said. “It has allowed us to meet the demand expectations that exist in the market and has also responded to our physicians in a way that has created the capacity or enabled the clinical technology that they need. […] “We are ramping this up because we have growing occupancy on the inpatient side and then we have opportunities on the outpatient side to expand our networks.”

HCA ended 2023 with 186 hospitals and 124 freestanding surgical centers in its portfolio. Those facilities handled nearly 975,000 equivalent admissions in the fourth quarter, an increase of 4.6 percent from the end of 2022. Equivalent admissions revenue rose even more, rising 6.8 percent year over year, and showing the other side of the higher utilization dynamic that has affected the outlook for several health insurers lately.

HCA’s work to build on that momentum this year will lean a little more toward new outpatient sites. Hazen said a large development pipeline there will drive more spending and more opening in 2024 and 2025 compared to the last two years. On the hospital side, the number of beds being added to HCA’s system (the company had nearly 49,600 licensed beds at the end of 2023) will be in line with the roughly 300 last year.

Chief Financial Officer Bill Rutherford, who last week announced he will retire May 1 and be replaced by Senior Vice President of Finance Mike Marks, said he expects admissions growth this year to be between 3 and 4 percent, not exactly last year’s pace but still comfortably ahead. of the historical experience of the HCA. Helping to drive demand, he said, was strong health insurance exchange enrollment growth in many of the states where HCA does a lot of business.

HCA’s growth in the latest quarter outpaced that of Tenet Healthcare Corp., where outpatient surgery caseload rose 3.9 percent year over year, but adjusted hospital admissions rose just 0.1 percent from late of 2022.

Chairman and CEO Saum Sutaria, whose team recently closed the sale of three South Carolina hospitals and signed a deal to sell another four in California, told analysts last week that his spending priorities haven’t changed: First First, Tenet’s USPI ambulatory surgery division will get about $250 million in capital and will be followed by investments in hospital growth projects.

“Specifically at USPI, historically we talked about $200 million to $250 million, now closer to $250 million, in capital allocation each year,” Sutaria said. “But the fact is, if you go back over the last five years and just look at what we’ve spent and average it […] has been a little bit higher than between $200 and $250 million. Us […] “We’re obviously comfortable going above $200 million to $250 million if those opportunities exist.”

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