Latest / Becker’s Healthcare Podcast / Alan Condon on HCA’s Record Year, the AI Race in Revenue Cycle and Key Industry Moves

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Alan Condon on HCA’s Record Year, the AI Race in Revenue Cycle and Key Industry Moves · Becker’s Healthcare Podcast

• 0:00
  This is Scott Becker
• 0:02
  with the Becker's health care podcast. We're thrilled
• 0:04
  today to get to visit with Alon Condon.
• 0:07
  Alon's an editor in chief at Becker's health
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  care and just a remarkable
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  leader.
• 0:12
  Alan joins us regularly to share with us
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  a couple of the stories that he's watching
• 0:15
  in health care.
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  Alan, take it away. Tell us a couple
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  of the stories that you're watching currently.
• 0:20
  Yeah. Always a pleasure. Thanks so much, Scott.
• 0:22
  Hope you had a great Thanksgiving.
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  So I think first and foremost, a really
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  interesting story. Listeners will be very familiar, of
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  course, with HCA Healthcare, largest for profit hospital
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  operator in the country,
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  really capping off a standout year with its
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  stock reaching a record high last week, the
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  November
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  of around about $515.
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  So the latest really in a milestone run
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  that reflects the company's really strong operational,
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  really strong financial momentum
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  throughout 2025
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  and out the back of the pandemic. So
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  as of December 3, time recording,
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  HSA stock remains elevated at around about $500.
• 1:02
  Just to give a little bit of an
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  insight, that's almost 35%
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  more 35%
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  higher than its July
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  2024
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  previous all time high record of around about
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  $360.
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  So that surge over the last eight eighteen
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  months or so really underscores investor confidence in
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  the for profit 190,
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  191
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  hospital systems,
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  ability to drive
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  sustained growth in a really challenging environment.
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  We reported on HCA's
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  third quarter results just a couple weeks ago.
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  Quick snapshot of those was $1,600,000,000
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  in net income around about an 8.6%
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  margin, and that's a better 29%
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  jump year over year of our report in
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  the same quarter last year. So
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  in the recent the recent Q3 results, HE
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  actually raised its full year 2025
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  guidance.
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  Now when we think of 2025
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  overall,
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  the health systems leaders are expecting revenues of
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  around about 76,500,000,000.0
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  for the year, net net income of around
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  about 6,700,000,000.0,
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  and an earnings per share of up to
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  $28.
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  So HCA continue to deliver really strong, strong
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  returns in the hospital sector, and Wall Street
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  is taking notice.
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  Yeah. No. It's fantastic what HCA has done.
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  They've become the clear for profit leader amongst
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  all health systems. They're also incredibly profitable.
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  Any lessons or other takeaways that people can
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  take away from the HCA situation or experience?
• 2:29
  Yeah. I think
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  really interesting. Following results for quite some time,
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  fantastic leadership from from top down. I think
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  the clear indicator in terms of its growth
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  strategy,
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  it has it's been quite
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  not as active as it has been in
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  recent quarters in terms of the m and
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  a footprint.
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  Really, really strong
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  outpatient footprint for it's in fantastic markets,
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  fantastic leadership from CEO Sam Hazen.
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  He really emphasized
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  the the real focus on high quality outcomes,
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  really making sure that that their their access
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  was better than some of its competitors and
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  some of the markets in which they've operated.
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  And, of course, first and foremost, just a
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  really, really
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  disciplined
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  cost control from its from its cost control,
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  from its CFO standpoint, all of which re
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  really resonate with Wall Street. I think with
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  with some of these record high earnings,
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  operational consistency,
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  and a history, like, to your point, Scott,
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  hate to see a real history of delivering
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  strong returns for its investors,
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  are really contributing to to it raising its
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  full year guidance. Some of those really record
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  high, stock prices for this year as well.
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  Really fantastic,
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  leadership across the board, and no doubt that
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  is expected to continue
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  into 2026
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  as well.
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  The the second story I wanted to to
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  touch on was
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  not much of a story, but something we've
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  been paying close attention
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  to in in conversations,
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  at Becker's with revenue cycle leaders, with CFOs
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  really across the board. And that's something we
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  report on last week in terms of this
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  ongoing AI arms race reshaping health care, more
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  specifically reshaping the health care revenue cycle.
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  I think playing catch up certainly
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  in 2025,
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  playing catch up with payers, payers have been
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  using AI for quite some time, automation and
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  revenue cycle, lot of lot of health systems,
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  hospitals replaying catch up, hoping to build their
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  own AI tools, whether that's with Epic, develop
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  their own internal tools and and AI agents
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  to replay some catch up, to combat some
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  of those headwinds we see in terms of
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  denials,
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  claims reviews, trying to protect their financial performance
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  as much as possible.
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  I think just for a quick little bit
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  of perspective here, I think payers have been
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  among the earliest adopters of AI in health
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  care, deploying it across claims processing,
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  call centers, things like utilization management.
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  UnitedHealth Group alone has about a thousand AI
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  use cases, including transcription tools, automated claims reviews
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  according to a recent recent report in the
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  Wall Street Journal.
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  As of the 2025,
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  it's expected that UnitedHealth Group
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  will use AI to handle over half of
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  all consumer calls. So just a a a
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  huge insight of what's going on the payer
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  side of the spectrum, but flipping over to
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  what's going on in providers,
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  no doubt AI is being more more AI
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  tools are being more sophisticated,
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  more deeply ingrained, more deeply embedded in the
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  revenue cycle, which is kind of a a
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  double edged sword to put it in the
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  words of, Cleveland's the next CFO, Dennis Naraway,
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  who we recently had on the podcast. And
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  the only quick little example I'll call out
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  here, just we highlighted UnitedHealth Group's AI cases.
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  Cleveland Clinic, despite some of their aggressive
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  back end efforts to comply
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  to align with some of these payer rules,
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  administrative burdens,
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  Cleveland Clinic still sees more than 15%
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  of claims initially denied
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  only to bring that figure down to below
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  down to below
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  2%
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  after a really lengthy
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  resource intensive appeals process. So from 15% of
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  initial claims aligned
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  down to below 2%.
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  Again, you're trying to use AI tools, agents,
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  automation to play catch up and try to
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  protect their financial performance as much as possible.
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  But the big question among CFOs, revenue cycle
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  leaders is, as AI tools become more sophisticated,
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  more embedded in the revenue cycle on both
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  sides of the sector, what does that initially
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  mean,
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  down the line? It no no easy answer.
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  No silver bullet here, but something that, really
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  worth talking about and something that, a lot
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  a lot of financial leaders are thinking about
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  at the moment.
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  No. Thank you so much. I think that's
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  it's fascinating to hear your note on payers
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  handling 50% of all calls through AI. That
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  might be why we can never get through
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  to the payer and actually ask them a
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  question, but I I say that somewhat jokingly.
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  But it is this real combination of trying
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  to
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  use AI to handle calls and still provide
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  great customer service,
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  you know, and and I guess the the
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  key for so many of us is, does
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  that AI
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  include an off ramp so you actually could
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  talk to somebody when you need to? And
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  I think the best systems are combining the
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  AI to take the lion's share stuff, but
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  but also including an off ramp so you
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  could actually talk to a person as you
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  need to to really get the customer experience
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  and service that you want.
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  That seems to be to me to be
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  the case.
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  Absolutely. I think the industry just trying out
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  for really more collaboration
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  amongst providers and payers to kind of really
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  get away from this push pull friction, that
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  dynamic that we've seen kinda really ramp up
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  in recent quarters.
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  Collaboration, no doubt, seems to be the key,
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  but can providers and payers really get there
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  to to to ultimately benefit providers, payers, and
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  also, let's not forget the patient cut in
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  the middle of all this as well.
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  I mean, a 100%. And and, you know,
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  once we've talked about HCA, their tremendous success,
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  I I've been watching CHS also
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  divest of some assets to become a stronger
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  and leaner company.
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  We talked about the evolution and the use
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  of AI.
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  Anything else that you're watching closely currently that's
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  top of mind?
• 8:02
  Yeah. I think I think it's worthwhile to
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  your point maybe expanding a little bit on
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  the the the recent c s CHS transaction.
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  I think,
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  Community Health Systems, another for profit system,
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  been so slightly
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  divesting in in various markets over the last
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  couple of years. Some hospitals and it's been
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  certain markets. One big, big transaction was just
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  got over the line as of December 1,
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  sold
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  lab assets in around about 13 different states
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  to Lam Corp, which has been snapping up
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  lab assets from hospitals and health systems across
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  the country,
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  around just shy of a $200,000,000
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  transaction here. But, again, really aligns with CHS's
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  strategic focus to focus on some of its
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  core acute care services,
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  and some of its key markets, divesting some
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  of those some of those lab assets to
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  LabCorp. And and on the lab side as
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  well, it's definitely worth noting. LabCorp over the
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  last couple years has been snapping up so
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  many of these lab assets, acquiring them, partnering
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  with health systems,
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  some of these outreach, select lab lab assets
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  across the board, really, really building a massive
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  enterprise there in the lab front. Certainly worth
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  worth noting as well, on the lab side
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  of the health care spectrum too.
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  Thank you so much. Alan, it is always
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  fantastic to visit with you.
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  It always helps me learn what's going on.
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  I greatly appreciate it. Again, Alan Condon,
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  editor in chief, Beckards Healthcare, just a tremendous
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  journalist and leader. Thank you so much for
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  joining us today. Always a pleasure. Thanks so
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  much, Scott.