HCA volume growth best since '02

Exec scuttles IPO question; East Coast division posting strongest numbers

Email | Print By Erin Lawley

Although the conversation during HCA’s third-quarter earnings call today largely focused on the hospital giant’s growth in patient volumes, there was at least a moment dedicated to the question that’s been circulating in the market for months: Will there be an IPO?

About midway through the call, BlueBay Asset Management’s Michael Boam asked whether the company has any plans to return to the bond market next year to refinance secured debt or return to the public market through an IPO.

“Based on this year’s performance, it wouldn’t seem that difficult,” he said of the latter.

Vic Campbell, HCA senior vice president, stuck to the script: “We don’t comment going forward as it relates to the bond market or any type of financing.”

On the whole, Campbell and other members of HCA’s Nashville-based and regional leadership teams talked about factors contributing to the company’s volume growth – up 2.7 percent for same-facility admissions and 11.1 percent for ER visits.

“The last time we had same-facility admission growth higher than 2.7 percent was in the fourth quarter of 2002,” said CFO Milton Johnson.

Kemp Dolliver, an analyst with Avondale Partners, said the volumes were the best among HCA’s peer group, excluding Healthcare Management Associates (Ticker: HMA), which was in “disarray” in the third quarter of 2008.

“We just didn’t see that kind of volume strength across the board,” Dolliver said.

Tenet Healthcare (Ticker: THC) had relatively flat admissions in the third quarter. Universal Health Services (Ticker: UHS) posted a 0.5 percent rise in acute-care inpatient admissions and a 2.1 percent increase in behavioral health inpatient admissions. HMA’s third-quarter admissions from continuing operations were up 5.4 percent.

Based on comments from each of HCA’s regional division leaders, the company’s eastern group – which includes Florida, southern Georgia and the Carolinas – seemed to account for much of the jump. Chuck Hall, president of the group, said it had a 15.3 percent growth in ER visits quarter over quarter, and admissions to the ER up 11.4 percent. In particular he mentioned the East Florida division, which had admissions growth of 6.9 percent.

Sam Hazen, president of the company's western division, said inpatient and outpatient volumes were up, with a particular rise in surgical activity. The CFO of the central group, Russ Harms, said inpatient volumes were “flattish” for the quarter, with a pickup in intensity in patient volume for surgical visits.

“One thing that’s driving volume… is this year we’ll have between $850 million and $900 million of new capital coming on line, and that’s higher than we typically have,” said Johnson. Several large projects are being completed this year, such as the addition of beds in Jacksonville.

In total, the company expects to spend about $1.4 billion for the year.