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Hospitals are hurting because people are going to the doctor less

Patient health insurance is also shifting from more lucrative plans to government ones

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Hospital operators haven’t been having a particularly good time in recent months.

Hospital operator HCA Healthcare Inc. HCA, -0.63% reported a dismal second quarter last week, complete with profit and revenue misses and a cut to its earnings-per-share outlook for the year.

HCA stock dropped and the malaise quickly spread to its rivals, with shares of Tenet Healthcare Corp. THC, -0.23% LifePoint Health Inc. LPNT, +1.60% and Community Health Systems Inc. CYH, -3.50%  also falling.

Then, on Tuesday, LifePoint Health reported a second-quarter revenue miss. Although the company beat on profit, Wall Street analysts pointed out soft volume and poor surgery trends.

“How can emptying hospitals prosper?” asked Mizuho Securities analyst Sheryl Skolnick. “How can LPNT turn around its acquisitions with such weak volume and revenue performance at both the legacy and acquired assets?”

One factor that could be at play: fewer people are going to the doctor, Veda Partners analysts Spencer Perlman and Sumesh Sood said last week.

Health plans increasingly shift more costs to consumers through such things as high deductibles and cost-sharing, which has in turn changed how patients behave, they said.

HCA earnings show that “we remain in a much lower healthcare utilization environment post-2008 and this is the new normal,” they said.

Related: HCA Healthcare stock drops 7% on Q2 profit, revenue misses

Perlman and Sood also pointed to data published by the Healthcare Cost and Utilization Project in June, which “clearly indicates a continued decline in inpatient stays, surgical volumes and deteriorating payer mix.”

See: Senate Republicans’ health bill boosts hospital and health-care stocks, but the gains may not last

Hospitals: We Want Billions Back if Obamacare Dismantled

Between 2005 and 2014, medical, surgical and maternal stays declined, they said, and the government was increasingly the health insurance payer, rather than more lucrative commercial and private health insurance.

Hospitals are also facing tremendous uncertainty due to congressional Republicans’ effort to repeal the Affordable Care Act. The ACA, also called Obamacare, greatly benefited hospitals because more people became insured, especially through the law’s Medicaid expansion.

“This is extremely important regarding hospital profitability as government pays below cost and commercial and private payers are really the only profitable ones for the hospitals,” Perlman and Sood said. “The business environment is deteriorating and combined with the political uncertainty of the future of the Affordable Care Act and a potential replacement, it is going to be a slog for the hospital sector.”

In April, HCA spoke about payer mix as part of the revenue and earnings warning it issued. HCA stock, along with those of other hospital operators, plummeted.

HCA shares have dropped 7.7% over the last month and LifePoint shares have dropped 9.3%, compared with a 9.1% drop for Tenet stock and a 29% drop for Community Health Systems shares.The S&P 500 SPX, +0.17%  has risen 2.1% over the last month.

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