HCA, Tenet could be hit by steep hurricane-related costs

admin

After battering the Bahamas as a Category 5 storm, a weaker but still destructive Hurricane Dorian is now marching toward the Southeastern U.S. with promises of strong winds and storm-surge flooding. For hospitals unlucky enough to be caught in its path, Dorian could also bring steep costs associated with disruptions in patient visits or facility damage.

Of the investor-owned hospitals, Tenet Corp. and HCA Healthcare are most likely to be affected by the hurricane.

According to research from Evercore ISI analyst Michael Newshel, 22% of Tenet’s hospital beds are in coastal counties in Florida and South Carolina, with 10% of its beds in areas with evacuation orders.

Meanwhile, 15% of HCA’s beds are in coastal counties in Florida, Georgia and South Carolina, including 8% in counties with evacuation orders, according to Newshel’s latest research note published Monday night. Universal Health Services could also be affected to a lesser extent, as 8% of its behavioral health beds and 3.6% of its acute-care beds are in coastal counties in the four states.

Community Health Systems, Quorum Health and Acadia Healthcare have no exposure in the coastal areas, Newshel wrote.

Some past hurricanes have come with hefty price tags. Hurricane-related costs to hospitals usually stem from disruptions to patient volume as elective surgeries are cancelled or hospitals are temporarily closed, but could also come from facility damage, Newshel explained in a phone interview with Modern Healthcare.

Tenet reported a $4 million hit to its adjusted earnings before interest, tax, depreciation and amortization in the third quarter of 2018 after Hurricane Michael struck the U.S. in October. In the third quarter 2017, Tenet reported a $30 million impact to adjusted EBITDA due to lower revenues and higher expenses associated with hurricanes Harvey and Irma.

Nashville-based HCA said it lost an estimated $31 million in revenue in 2018 directly related to Hurricane Michael’s impact on its Florida facilities in the fourth quarter, according to its quarterly earnings report. The year before, HCA reported $140 million in additional expenses and losses of revenues from hurricanes Harvey and Irma’s impact on its Texas, Florida, Georgia and South Carolina hospitals. Those estimates don’t take into account any funds hospitals may recover from insurance.

Hurricanes Harvey and Irma in 2017 also resulted in a loss of operating revenues and expenses related to hurricane response efforts totaling about $40 million, CHS reported during the fourth quarter that year. UHS, meanwhile, reported a negative impact to its EBITDA of $5 million to $7 million in the fourth quarter of 2018 from Hurricane Michael and a $12 million to $13 million hit in 2017 from hurricanes Harvey and Irma, according to Newshel’s research note.

While these losses might affect a hospital’s earnings expectations for a quarter or two, they are unlikely to impact the bottom-line long-term, Newshel said.

The federal government has declared public health emergencies in Florida, Georgia and South Carolina, which gives the HHS more flexibility in how it meets health needs during disasters. The agency also sent 200 personnel, medical equipment and supplies to help respond to medical needs. In Florida, eight hospitals have so far evacuated patients, according to the Florida Hospital Association.

Subscribe for the latest Celebrity Gossips

Spread the love
Next Post

Dorian could hit HCA, Tenet with steep hurricane-related costs

After battering the Bahamas as a Category 5 storm, a weaker but still destructive Hurricane Dorian is now marching toward the Southeastern U.S. with threats of strong winds and storm-surge […]