There's unpredictability around potential changes to programs and their impact, CEO Sam Hazen told investors.
As the Trump administration settles in, health systems are standing by to see how policy shifts could affect strategies for the rest of the year.
HCA Healthcare CEO Sam Hazen relayed some optimism, but also uncertainty, when asked by investors on a recent earnings call what the organization is anticipating for challenges around supply chain and public insurance programs.
The health system giant released its fourth quarter earnings, which reported $18.3 billion in revenue and $1.4 billion in net income. For comparison, HCA yielded $17.3 billion in revenue and $1.6 billion in net income over the same period in 2023.
The possibility of tariffs could put pressure on organizations' supply chain going forward, but HCA CFO Mike Marks stated that the system "has been working on tariff mitigation strategies for many years," including fixed price contracting, supply chain mapping, and risk assessment.
He noted that about 70% of HCA's supply spend for 2025 is contracted with firm pricing and that the system has diversified away from Chinese suppliers over the years.
"Like you, we are closely monitoring the announcements on tariffs from the new administration, including which countries are targeted, the rate of tariffs being implemented, and potential tariff exclusions for healthcare-related items," Marks said.
Hazen, meanwhile, highlighted the growth in exchange enrollment as a positive sign that the Trump administration will keep it around.
"We believe it's a positive outcome for families. It creates greater access to care. It improves outcomes," Hazen said. "So, all of that is a backdrop we think, politically, is a positive and presents an opportunity for the Trump administration, we believe, to sustain and ensure that families have coverage, they have affordability, and they have the opportunity to achieve positive outcomes for themselves and really for their family. So, we don't have any current insights into where this is going."
However, Hazen stated "it's too early for us to call anything" on the direction the administration will take enhanced Medicaid subsidies.
In terms of Medicaid supplemental payment programs for states, which could be nixed under Trump, HCA is still awaiting payments in Tennessee, with a wide range of estimation affecting 2025 guidance.
"When we consider all the various programs, noting the complexity and the variability and the moving parts, we are projecting and estimating that our net effect of supplemental payment programs will range between flat to 2024 to upwards of a $250 million headwind," Marks said.
Jay Asser is the CEO editor for HealthLeaders.
KEY TAKEAWAYS
After reporting fourth quarter earnings, HCA executives fielded questions from investors on policies and funding cuts by the Trump administration.
HCA said it has taken steps to diversify its supply chain and lock in prices in preparation of possible tariffs.
CEO Sam Hazen believes exchange enrollment growth may appeal to the administration, though it's too soon to tell whether an extension on enhanced Medicaid subsidies is coming.