How outpatient will help drive HCA's growth in 2019

For the third quarter, Nashville, Tenn.-based HCA Healthcare reported same-facility surgeries increased 3.2 percent, including a 4.2 percent increase in same-facility outpatient surgeries. At the same time, same-facility inpatient surgeries increased 1.6 percent.

The company also reported outpatient surgeries showed strong growth, with freestanding surgery center cases up 3.8 percent and hospital-based surgeries up 5 percent. Cardiology procedures in particular were up 2.3 percent, both inpatient and outpatient.

The increase in outpatient surgeries is indicative of a larger national trend in procedures going outpatient. HCA owns 178 hospitals and 119 ASCs across its network in addition to other healthcare facilities, and they will play a big role in the company's strategic success going forward.

"The company's growth agenda underneath these macro trends is once again yielding solid market share gains," said HCA Healthcare COO Samuel Hazen during the quarterly earnings conference call, as transcribed by Seeking Alpha. "Our overall competitive position and our diversified portfolio of markets is strong, as a result of improvements in quality outcomes, improvements in nursing performance and strategic capital spending which is adding appropriate patient and surgical capacity along with more outpatient facilities to serve our patients conveniently."

HCA reported orthopedic surgical volumes were also up significantly during the quarter, and orthopedic cases typically have higher revenue per case than other procedures. Mr. Hazen said the company has achieved expectations for commercial and government rates on the high-value procedures and aims to add clinical capabilities so the system's hospitals can care for more patients with complex procedures.

"If we can increase the acuity in our facilities, deliver the higher revenue per patient, put that on top of the same fixed cost, then procedures [provide a] decent margin lift for the company," said Mr. Hazen. "So that's been our strategy. We continue to execute on it. We think we have headroom in it. As we build out our outpatient facilities in each of our markets, we think that opens up the gateway if you will to an HCA provider system. And then when our patients need more complex care, we can provide it to them elsewhere in the system."

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