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HCA to Acquire CareNow Urgent Care Centers

 |  By John Commins  
   October 29, 2014

CareNow specializes in urgent care, family practice, and occupational health services. In 2013, its 24 locations served approximately 9% of the Dallas-Fort Worth population.

HCA has purchased CareNow, a privately held chain of 24 urgent care centers serving Dallas-Fort Worth. Financial terms were not disclosed.

When the deal is finalized, CareNow will become a division of HCA, which already operates 11 hospitals and more than 50 ambulatory care sites in the Dallas-Fort Worth Metroplex.  

The deal is expected to be completed before the end of 2014.

"CareNow has a strong brand and will add an exceptional network of urgent care centers and 130 physicians that complement our hospital, emergency, and outpatient services in Dallas-Fort Worth," Sam Hazen, president of operations for HCA, said in prepared remarks. "This transaction represents two trusted providers coming together to deliver a broader and more integrated level of quality healthcare services."  


How to Open an Urgent Care Center


CareNow was founded in 1993 and specializes in urgent care, family practice, and occupational health services. In 2013, CareNow centers served approximately 9% of the Dallas-Fort Worth population.  

HCA is the nation's largest for-profit hospital chain and operates 165 hospitals and 113 freestanding surgery centers in 20 states and England. HCA North Texas network includes 5,500 physicians and 12,000 employees in Dallas-Fort Worth.

"If you look at the lay of the land in Dallas-Fort Worth, the two biggest players are Baylor Scott & White Health, and Texas Health Resources. There is Methodist Health System, but they are a smaller player and HCA is in the Methodist range," says John G. Self, founder and president of John G. Self Associates, a consultant and veteran observer of the Dallas-Fort Worth healthcare sector.

'A Play for Population Health'
"This is an acquisition designed to enhance HCA's market position for population health management," he says. "CareNow is an interesting company. They are a patient-centric, Web-based company, which means that if you aren't feeling well and you don't have a primary care physician you can make an appointment on line so you don't have to sit and wait at the clinic. That's kind of a sexy little change."

Self says the acquisition "makes sense for HCA" because it gives them market reach and a bigger footprint and it's not a huge risk for them in this market.

"They bought a company with an apparent good reputation and a little bit of an innovative approach to accessing their care," he says. "This is a play for population health. We know they have to have some level of size to compete effectively for patients who will use your facility and essentially commit to you as a beneficiary. That's what it's all going to be about."

A 9% Revenue Increase in Q3
Also Tuesday, HCA released third-quarter financial results, and announced that the board of directors had authorized the repurchase of up to $1 billion in outstanding common stock.  

"Results for the Company's third quarter reflect a continuation of solid volume trends and improving payer and service mix," HCA President and CEO R. Milton Johnson said in prepared remarks.  

When compared with the third quarter of 2013, HCA third quarter 2014 saw:

  • Revenues increase 9% to $9.220 billion
  • Net income total $518 million, or $1.16 per diluted share
  • Adjusted EBITDA increase 14% to $1.8 billion
  • Cash flow from operations increased 25.3% to $1.1 billion
  • Same-facility equivalent admissions increase 4.1%, same-facility ED visits increased 7.3%, same-facility admissions increased 2.8%
  • Same-facility revenue per equivalent admission increased 3.8%

HCA stock was trading in the $72 range on Tuesday, an approximately 53% increase from its $47.02 value at the end of the day on Oct. 28, 2013.


Medicaid Expansion Creates Stark Contrasts Among Hospitals


The third-quarter results for HCA suggest that for-profit healthcare systems are continuing to enjoy a windfall in revenues in 2014 with the advent of Medicaid expansion under the Affordable Care Act.

Industry-wide, a recent PwC Health Research Institute analysis found that the nation's five largest for-profit hospital companies were seeing a stark contrast with their combined 538 hospitals in expansion and non-expansion states.

For example:

  • Hospitals in the 24 states that have rejected expansion continued to see flat or sagging admissions and little if any reduction in the numbers of uninsured and non-paying patients.
  • Hospitals in the 26 states and the District of Columbia that expanded their Medicaid coverage to include an additional 7.2 million people, and accepted the billions in federal dollars that accompanied it, saw a significant rise in Medicaid inpatient admission and a concurrent decline in self-pay and charity care.

Earlier this year HCA revised its earnings outlook to account for better-than-expected revenue. The company hospitals in five expansion states saw Medicaid admissions grow 32% with a corresponding 48% drop in uninsured admissions through the first half of the year. Uninsured volume also declined 2% in non-expansion states.

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John Commins is the news editor for HealthLeaders.

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