Every for-profit hospital chain reported admission upticks: Is it a blip?

By | November 13, 2019

All for-profit hospital operators reported an increase an admissions growth during the third quarter of this year, raising questions about whether the uptick is just a blip or represents sustainable growth. 

The gains in the third quarter add on to the accelerating admissions growth throughout the year. Tenet reported its third consecutive quarter of admission gains. HCA described it as the “strongest same facilities growth in volume” over the past 17 quarters. That’s on top of HCA’s trend-defying 22 quarters of consecutive inpatient admissions increases. Community Health Systems and Universal Health Services also reported higher inpatient volume for the third quarter. 

Hospital operator    Q4’18     Q1’19     Q2’19     Q3’19    
Tenet -2.7% -0.1% 3.3% 3.6%
HCA 1.9% 0.9% 2.1% 3.2%
CHS -0.5% -0.1% 2.3% 2.4%
UHS 2.9% 5.2% 5.2% 6.6%

(The table shows same-facility inpatient volume growth.)

The widespread volume growth across providers seems to be a “true uptick,” Brian Tanquilut, an analyst with Jefferies, told Healthcare Dive. 

It appears that high deductible plans are driving seasonality, he said, meaning patients are putting off care until they hit their deductibles, pushing procedures away from the first and second quarters of the year. 

Inpatient surgical procedures were up nearly 2% during the third quarter at Tenet facilities when looking at the same hospitals’ performance during the prior third quarter.

While those momentary gains are part of the story, the nation’s high employment is a more sustained trend. The U.S. unemployment rate continues to hover around 3.5%, a historically low level. Tanquilut said the numbers bear that out.

“Core demand seems to be picking up, not just in Medicare but commercial as well, and that’s why I think there’s an employment component here,” Tanquilut said. 

Ron Rittenmeyer, CEO of Tenet, was asked on the third quarter earnings call why he thinks demand seems to be rising more broadly across the sector. He was firm that it’s no coincidence and part of a larger strategy. 

“It’s not that we’re just accidentally seeing a lot of people walk in specifically to our hospitals,” he said. “It’s not just accidental that we’re getting the volume. A lot of it is because we are providing a pathway into servicing a need that the community has that we probably didn’t do as well in the past.”

Tenet Chief Operating Officer Saum Sutaria said the chain was selective in its investments, jumping on what yielded clear benefit. “And as they have yielded benefits, they have given us more confidence to refocus our capital plans to aggressively be aligned toward some of those service line opportunities that we think we’re best positioned to serve in the acute care hospital,” he said.

Still, despite the volume growth, more care will continue to move from hospitals and into outpatient settings. Fred Bentley, managing director of Avalere, told Healthcare Dive, “I don’t think there is this necessarily dramatic upswing and the pendulum [is] swinging back in favor of significant inpatient growth.”

However, Bentley believes the aging population will help bolster admissions for hospitals. Typically, utilization — both inpatient and for skilled nursing facilities — starts to tick up around age 75, he said, and a major cohort of the American population is set to turn 75 next year. Even though it’s early, it’s possible that population is contributing to the gains this quarter, he said. 

“The leading edge of the boomers, those born in 1946, they don’t turn 75 until next year. You put all that together and it’s conceivable that that will be a boost to demand going forward,” Bentley said.

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