HCA Holdings 4Q16 Earnings Call Notes

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HCA Holdings (HCA) R. Milton Johnson On Q4 2016 Results

Acquisition pipeline a little more robust than it has been

“I think with respect to opportunities for acquisitions in this environment, we do have a pipeline today, I’ll comment. I will comment that I think, I will also say as usual, its very difficult to know how some of the opportunities and discussions we’re having will actually turn out, but I will say that the pipeline today is little more robust than it has been in recent years and the transactions feel like they could be more realizeable and that’s just my kind of feel for the market right now.”

Beds and occupancy numbers

“It is an annual number. That’s on average, I mean, we have about 38,000 impatient beds that are operational, so the 400 or so that Milton counted, it’s a 1% increase in capacity and then our ER beds we have about 5,000 ER beds so if we’re adding 200 – 150 to 200 then next we’d get to the 4%. Its important to understand that our impatient bed occupancy for the company is at record highs, we’re operating over 70% in patient occupancy utilization on our operating beds. Our emergency room room that utilization is running almost 90% utilization.”

A lot of unknowns in ACA reform but we’re probably not going backwards to old uninsured levels

“I do believe when I think the management team here believe that there will be — if there is a retail there will be a replacement. What that replacement will look like and how many lives it’ll cover, it’s been a — we can’t, we don’t know. But I’ll say I don’t see it’s going back up to the 2024 sort of uninsured volume lies and percentage is population uninsured that we had in 2014”

Exchange business is important to us but only a little extra volume

” The exchange business is important to us, but it yet it only as about 2.5% of extra little volume. So we watched the market place very, very closely and to be able react to it when we see change coming. And this is one of the situations we are going to continue to do that. This next year we will be watching the market very closely as we get more clarity around how we think health policy changes if any in the next two, three years it will impact ACA”

Samuel Hazen

Significant movement around payers entering the provider space

“Well, there’s has been significant movement across our markets where payers entering the provider space. Optum and United have made a couple of strategic acquisitions, but they’re sprinkled from one market to the other and they don’t really have what I call it concentrated influence on any one particular market. Obviously, we see opportunities for us to work with the payers as they try to build out providers assistance because what we’re doing as an organization and we’re having discussions with the payers around using our network and our footprint in these areas to accommodate their objectives and we think there’s a lot of opportunities there for HCA and other payers to accomplish that.”

Opportunities for expense management

“From the supply and other expense standpoint no significant inflationary pressures that we see at this particular point in those categories that will create any unusual risk in our expense structure for 2016. So we feel pretty good about where the company is. From that standpoint we have a host of initiatives underneath our expense structure that are driving toward efficiencies and we continue to evolve those, they center around better labor management approaches with one HR platform, our performance improvement change which we’ve talked about in the past continue to find opportunity to enhance processes in our facilities and efficiencies and in our clinical agenda it’s continuing to identify opportunities to improve supply cost utilization, blood utilization, better patient length of stay and those kind of thing. So the combination of those are still a positive opportunity for HCA and one in which we believe we can execute on and mitigate some of these pressures.”