Nashville, Tenn.-based HCA Healthcare is seeing softer elective surgery volumes as patients lose coverage through the health insurance exchanges, with broader affordability pressures potentially contributing to the slowdown, CFO Mike Marks said Sept. 15 at the Jefferies Healthcare Services and Technology Conference.
The 189-hospital, for-profit system continues to see strong overall demand for healthcare services, but the movement of patients from exchange coverage to uninsured status is weighing on elective procedures.
“On the inpatient side of elective, and frankly, on the outpatient surgery side as well, the biggest issue is HICS,” Mr. Marks said, referring to health insurance exchange coverage. “This movement out of HICS to uninsured — as people in our communities have lost coverage on the exchange [and] become uninsured — they generally lose access to elective care. That is the primary driver of the slowdown in our elective surgery volumes is exchanges.”
The comments build on a trend that leaders at HCA — as well as those at Franklin, Tenn.-based Community Health Systems, Dallas-based Tenet Healthcare and King of Prussia, Pa.-based Universal Health Services — highlighted during their second-quarter earnings calls.
At HCA, same-facility inpatient surgeries fell 2.3% year over year in the second quarter and outpatient surgeries declined 3.4%. Elective inpatient surgery volume — which accounts for about one-third of HCA’s inpatient surgical cases — declined 6%.
HCA President and CEO Sam Hazen said in July that reduced elective demand was the main factor behind the surgical softness, pointing to patients who previously had exchange coverage as one contributor.
“The primary explanation for the decline was from reduced demand in elective surgeries across both inpatient and outpatient settings,” Mr. Hazen said at the time. “We believe there are several factors contributing to this dynamic, including declines from patients who were previously covered through the exchanges.”
The decline has not extended across HCA’s broader volume base. Mr. Marks said emergency surgery growth remains strong and consistent with historical trends. HCA reported 2.5% admission growth and 2.7% adjusted admission growth in the second quarter, while insured business excluding the exchanges grew 3.2%.
“We’re dealing with that pressure, [but] the fundamentals of demand are still strong,” Mr. Marks said.
Coverage losses are not the only factor affecting surgical volumes.
Mr. Marks said the second driver is the ongoing phaseout of Medicare’s inpatient-only list. HCA is in the second year of what he described as a three-year transition, with orthopedic and spine procedures particularly affected this year as cases shift from inpatient hospitals to outpatient settings.
That movement is one reason HCA has continued building out its ambulatory network. The company operates about 150 ambulatory surgery centers across its 43 markets in 19 states, allowing procedures to remain within HCA’s network as they migrate from inpatient to outpatient settings, according to Mr. Marks.
“We surround our hospitals with network assets,” he said. “Think about urgent care centers and freestanding emergency rooms and ambulatory surgery centers and physician clinics, with the idea of making it easy and convenient for patients to access our network when they need low acuity care, and then as they need higher acuity care to make it seamless and convenient for them to access our acute care hospitals or our ambulatory surgery centers as they need it.
“Surgery centers play a role within our network. They help us secure our surgeons, and they have an investment opportunity in our surgery centers and then they tend to work in our inpatient facilities when they need to do inpatient care,” he said. “As cases sometimes move from inpatient to outpatient, we have the facilities, the surgeon community and the access for patients at all levels of care.”
The third factor behind the elective slowdown, however, is less certain: consumer sentiment.
Mr. Marks said HCA believes some patients may be delaying elective procedures because of economic pressures, including inflation, energy costs and rising out-of-pocket obligations.
“It’s early, so this is still a bit of a hypothesis, but we believe we’re seeing some consumer sentiment on elective surgery,” he said. “Our early read is we think there could be some deferral of elective care right now that we saw in [the] second quarter.”
HCA is also seeing patients responsible for more of their healthcare costs across employer-sponsored insurance, Medicare Advantage and exchange plans, Mr. Marks said.
“What we’re seeing this year is that our patients are owing a little bit more from benefit design, on employee-sponsored insurance — even a little bit on Medicare Advantage — and then certainly on the exchanges,” Mr. Marks said. “There’s a bit of movement from silver to bronze and they’re owing more.”
“At the same time, given the economy, they’re not paying us more,” he said. “It’s one of the pressure points this year — we’ve seen a little bit of slowdown in our ability to collect out-of-pocket amounts due and they owe a little bit more. It’s part of what we think consumer sentiment is having an effect on us.”
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