Latest / Becker’s Healthcare Podcast / Health System Earnings, Divestitures, and Strategic Shifts to Watch with Alan Condon

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Health System Earnings, Divestitures, and Strategic Shifts to Watch with Alan Condon · Becker’s Healthcare Podcast

• 0:01
  Every year, Becker's annual meeting brings health care
• 0:04
  leaders together to unpack the most pressing issues
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  facing the industry.
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  And every year, those conversations shift in profound
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  and unexpected ways.
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  This April, more than 3,500
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  healthcare executives will return to Chicago for Becker's
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  sixteenth annual meeting.
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  Seven ninety five elite speakers will offer new
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  lessons, new case studies, and predictions about what
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  comes next.
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  Join us April 13 through the sixteenth.
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  For the agenda and event details, visit beckershospitalreview.com
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  and click on the events tab in the
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  upper right.
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  This is Scott Becker with the Becker's health
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  care podcast.
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  We're thrilled today
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  to to be joined by Ewan Condon.
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  Ewan is an editor in chief the editor
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  in chief of Becker's health care.
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  Brilliant leader, brilliant thinker about health care and
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  health care system issues.
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  Alan, I'm gonna tee it up and ask
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  you to take it away and tell us
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  what are a few of the stories that
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  you're watching currently in health care. Again, Scott
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  Becker with you with Becker's Healthcare.
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  Ellen Condon, editor in chief. What are a
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  couple of the stories you're watching closely currently?
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  Yeah. Pleasure to be to be back on
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  after a couple weeks away, Scott. But, I
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  think
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  coming to the January
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  now, of course, we're starting to see some
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  of the
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  health system q four slash full year 2025
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  financial reports come through and also on the
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  payer side as well. So just today,
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  HCA read the results. Her earnings call a
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  little bit later on this morning.
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  So just kinda to to give readers, audience,
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  a bit quick update on where HCA stands
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  as today. Fantastic system, huge for profit system,
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  and some really, stellar financial results as it
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  relates to 2025.
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  So,
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  HCA overall,
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  reported a net income for 2025
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  of around about $6,800,000,000.
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  And to give you some context, that's,
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  about an 8% increase year over year from
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  what from the net margin, the net income
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  they reported in the previous year.
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  And just as hone in on the revenue
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  growth,
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  grew in revenue by about $5,000,000,000
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  in revenue this year.
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  Now it's about a $75,000,000,000
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  company, $75,000,000,000
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  health system.
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  Revenue out outpaced expenses by quite a bit.
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  Revenue grew by $5,000,000,000.
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  Expenses grew by about $3,700,000,000.
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  So really, a substantial performance on the operating
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  side, financial side.
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  And just to give some context as to
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  what we're expecting, what HCA is expecting for
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  2026,
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  issued some some some guidance granted. It's only
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  the start of the year now, but HCA
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  similarly
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  expects to grow by about another $5,000,000,000
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  in revenue for 2026.
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  Now a lot a lot still up in
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  the air, a lot can change, but still
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  forecasting some impressive revenue growth and figures
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  for this year as well. And then also
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  has earmarked about $5,000,000,000
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  for the entire company for acquisitions,
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  for a capital expenditures,
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  new hospital bills, new ASCs, outpatient
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  growth, and whatnot. So
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  no certainly no signs of slowing down in
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  terms of HCA growth, fantastic leadership, but really,
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  really impressive performance across the board from that
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  for profit health system, Scott.
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  Thank you. And and they keep on sort
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  of chugging along, and it seems like some
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  of the larger
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  not for profit systems
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  are doing pretty well as well. But HCA,
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  at least profitability
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  wise, seems to outpace everybody year after year.
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  And they're also one of the few large,
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  large health systems
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  for profit health systems that have stuck to
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  really being a hospital system or at least
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  as much as anything a hospital system, whereas
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  Tenet
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  and others
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  have moved to heavily outpatient as well as
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  being a health system.
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  I mean, it's fascinating what HCA has accomplished
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  and how they continue to do so.
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  Yeah. Absolutely. I think,
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  it is really interesting, Scott, to your point
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  as you as you look at where HCA
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  stands, where Tenet stand, some diverging strategies over
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  the last couple years.
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  HCA, no doubt, it's quite a substantial outpatient
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  footprint, but nowhere near has made that investment.
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  The likes of tenant is doing, the likes
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  that or even see Ascension, somewhat doing on
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  the for profit side with their potential
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  acquisition of AmSurge, which is, likely to close
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  maybe this this quarter as well. But I
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  think HCA very very much still in the
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  hospital game. I believe about a 190 hospitals
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  in The US,
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  compared to about 2,500
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  ambulatory
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  care sites and whatnot.
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  But but kinda ties nicely into the next
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  the story that I wanted to touch on,
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  Scott. When staying on the line of for
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  profit health systems here,
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  community health systems, the other for profit system,
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  hasn't quite reported its fourth quarter or full
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  year twenty twenty five results yet. We believe
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  they're gonna come either next week, so pay
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  close attention to there. But,
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  had the the pleasure of speaking with my
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  colleague, Kelly Gooch. We we interviewed the CFO
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  and the CEO
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  of Community Health Systems. That is Kevin Hammonds,
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  the former CFO, and their new CFO, Jason
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  Johnson. So just to really dive into the
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  strategy behind CHS ongoing turnaround,
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  with their new CEO, new new CFO leader.
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  So
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  really ongoing divestiture program here. CHS is selling
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  this year five hospitals for a combined about
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  a billion dollars.
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  So those five hospitals are in Alabama. They're
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  in Tennessee.
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  And, notably,
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  three of the hospitals it's selling are in
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  Pennsylvania, and those three hospitals has been trying
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  to get over the the line for quite
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  some time, had one deal with a a
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  a nonprofit health system that fell through, collapsed
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  in November
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  2024,
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  now trying to sell that same three hospital
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  health system in Pennsylvania,
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  Commonwealth Health,
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  and and that would signify its exit from
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  the state of Pennsylvania.
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  So so looking to sell hospitals in Alabama,
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  Tennessee, and Pennsylvania
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  as part of its ongoing divestiture program, those
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  five hospital sales in those three different markets,
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  again, will be a combined $1,000,000,000,
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  in capital for,
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  CHS. So
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  I think the last quick kinda note here
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  just in terms of,
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  speaking with Kevin and and Jason at CHS,
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  essentially, what they told us is that this
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  divestiture plan really for Exosystems'
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  broader strategy of redefining its portfolio
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  around those core core markets and hospitals that
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  it wants to focus on and continuing
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  to reduce its debt. So
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  since 2039,
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  I believe, CHS has paid down more than
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  $3,000,000,000
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  in debt. And, again, more of these hospital
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  sales will acquire more liquidity, more capital again
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  to pay down some of its debts, really
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  hone in on some of its core markets.
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  But
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  different different end of the spectrum when we
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  see what's going on at CHS,
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  ongoing ongoing revamp of its operate operating model,
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  paying down some of its debts, ongoing turnaround,
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  and we look at the likes of your
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  HCA and your tenants, really, really strong returns,
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  continue to grow and strong margins there.
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  No. It it is remarkable
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  what CHS
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  HSHS,
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  COD Community Health Services, has done over the
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  last decade to get themselves back into the
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  type of fiscal shape they need to be
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  in. They'd at one point overextended themselves
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  in the effort to chase HCA
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  and be the largest
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  owner of hospitals
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  in the country,
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  that was under a couple CEOs go. And
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  in doing so, they'd highly leverage themselves. Then
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  they've spent the last five to ten years
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  trying to
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  trim themselves back down and put themselves in
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  great fiscal shape, and they've done a great
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  job of it. But it is fascinating to
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  see that divergences between HCA,
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  community health systems, and tenant health care and
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  where they've each gone in terms of being
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  some of the major for profit health system
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  chains in the country.
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  Mhmm. Yeah. Absolutely.
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  And I think
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  last last one on that note, I think
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  since we're on the topic of of mergers
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  and acquisitions, hospital sales, divestitures,
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  I think we we should call out,
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  Providence, CommonSpirit, too big through the largest nonprofits,
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  Catholic faith based systems,
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  also going through looking to divest and sell
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  some hospitals in certain markets as they look
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  to really kind of focus on some of
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  their core markets, really take a harder look
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  at where they're operating, and also look to
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  get a bit of an injection of capital
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  as well to focus on some of their
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  their ongoing turnaround efforts. Both systems do expect
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  a big, big financial hit this year in
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  terms of, some of the Medicaid, federal cuts
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  coming down the pipeline late twenty twenty six,
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  2027,
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  and everything along with the ACA subsidies as
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  well up in the air, of course, accounting
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  for that. So really kinda try to get
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  ahead of the game in terms of offloading
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  some hospitals that make sense in certain markets.
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  And CommonSpirit
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  is in talks to sell
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  seven hospitals,
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  at the moment.
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  Four hospitals will be sold in North Dakota
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  to local health system, Altru Health System, and
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  then it also is aiming to sell three
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  hospitals
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  in Ohio.
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  It's, to UPMC
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  Health. So, essentially, that would really
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  UPMC really make it expand deeper and deeper
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  into Ohio,
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  with that three hospital sale that was expected
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  to close, I believe, in the second quarter
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  of this year.
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  Yeah. It's not just the for profit systems
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  and the that are also making some of
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  these divestitures. We're also seeing it likely the
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  same. We saw Ascension, of course, on the
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  nonprofit side really revamped its hospital portfolio, consolidate
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  hospitals, a lot of divestitures in key markets.
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  CommonSpirit and Providence now doing some of the
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  same as we think about some of the
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  financial challenges that are coming down the pipeline
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  late this year and into next, Scott.
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  Elon, literally just fascinating.
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  Thank you so much for taking the time
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  with us today on the Beckers HealthCare podcast.
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  The the the amount of efforts at these
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  major, major not for profits, I mean, Ascension
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  is doing a fascinating thing to get into
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  the ASC business with
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  acquiring AMPSURG.
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  CommonSpirit,
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  like Community Health Systems, trying to trim their
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  portfolio of hospitals a little bit. But it's
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  fascinating to see the different strategic moves that
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  some of these large systems are making to
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  stay competitive and stay financially thriving. Just fascinating.
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  Alan,
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  thank you so much for joining us as
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  always on the Veterans Healthcare Podcast. You're both
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  a remarkable journalist and, more importantly, a remarkable
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  leader. Thank you so much for joining us.
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  Always a pleasure. Thank you so much, Scott.
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  Cheers.