The health system titan outlined its plans to continue growing during its first investor day in 20 years.
HCA Healthcare, already the largest health system in the country, is set to pursue a significant expansion to further solidify its hold in the market.
The hospital operator laid out its plans in its first investor day in 20 years, reflective of the organization's aim to go from "strength to strength," CEO Sam Hazen said. Those plans include investing billions of dollars to expand its service lines, increasing its market share in healthcare services from 27% to 29% by 2030, and targeting adjusted EBITDA growth of between 4% and 6% over the next five years.
HCA has $5.3 billion allocated for projects across the next two years, with about half ($2.7 billion) going to expansion and renovation, while $2 billion is earmarked for a roughly even spend on new inpatient and outpatient facilities, chief operating officer Jon Foster said.
Where the operator is focusing its growth efforts is in existing markets, such as Austin, Denver, and Nashville, where it is headquartered.
"We believe that where you compete is just as important as how you compete and we believe we are competing in the right markets," Hazen said.
On the inpatient side, HCA already holds the most or second-most market share in about 80% of markets, Foster said. The operator revealed it will continue investing in emergency services in the hopes of tightening its grasp, with 51 emergency departments under development after more than 100 were added in the last decade, said Richard Hammett, president of HCA's Atlantic Group.
For outpatient settings, Foster relayed that HCA wants to increase its locations from the 12 it currently has, to 20 within the next few years.
"For us, to be successful, we have to build networks that have local scale, they have to have local scope of services in facilities, and we have to integrate them into a cohesive network," Hazen said.
What HCA's leadership didn't touch on in its investor day was the operator's specific plans to combat the rising physician professional fees, which hampered the earnings of some of the biggest for-profit health systems in the third quarter.
Though HCA reported $1.08 billion in profit for the quarter—a slight dip from the $1.13 billion it brought in over the same period last year—it also saw its professional fee expense for contracted providers grow 20% year over year, CFO Bill Rutherford said on an investor call.
HCA's recent joint venture with physician staffing firm Valesco was meant to be an effective solution to mitigating costs, but the operator revealed that the partnership will lose the company around $50 million per quarter going forward.
While Rutherford said efforts are under way to salvage the partnership by reducing the cost structure, adjusting programming, and working with payers on reimbursement, HCA's finances may be hindered on two fronts for the foreseeable future—the losses from Valesco and the inflating physician professional fee.
The planned expansions, however, should allow the health system giant to maintain its position in the healthcare landscape.
Jay Asser is the contributing editor for strategy at HealthLeaders.
KEY TAKEAWAYS
HCA CEO Sam Hazen and other leaders detailed the operator's vision for expansion, which includes investing $5.2 billion in projects for expanding and renovating existing facilities, as well as opening new inpatient and outpatient locations.
By 2030, HCA wants to grow its market share in healthcare services from 27% to 29%, while seeing EBITDA growth of between 4% and 6% in the next few years.