Publicly-Owned Hospital, Article Review Example

HCA is a publicly-owned hospital chain with a total of 162 hospitals: 156 of the hospitals are general, acute care hospitals, five are psychiatric hospitals, and one is a rehabilitation hospital.  The hospitals are located in 20 states throughout the United States and England.

There are numerous challenges and opportunities that HCA must face.  From a financial perspective, HCA’s most pressing challenge is debt.  The 10-K statement reveals that the Group’s total indebtedness was $28.930 billion at the end of 2012. This is roughly equal to revenues that HCA earned in 2012. High levels of debt, in general, make it more difficult for a company to access financing and increase volatility of operations.  The high debt level is particularly a concern as HCA’s business model changes under health reform (the Affordable Care Act).

The Affordable Care Act will fundamentally change, over time, the way HCA operates. Indeed, whereas hospitals have traditionally operated on a fee-for-service business model, the ACA promotes a switch to payment based on outcomes. Payment for the Accountable Care Organization Model , in which hospitals and other traditional health care actors cooperate, is based on outcomes.  Although Medicare is only 25% of HCA’s current revenue, the switch to pay for outcomes will represent a difficult transition for the chain. Coverage is another challenge in that some states might not adopt the Medicaid expansion- this means HCA could still be on the hook for payments not made by patients.

Overall, HCA has a robust strategy to deal with these challenges.  First, HCA just went public meaning that the firm should have substantial capital reserves to pay down some of the accumulated debt.  At the same time , the hospital is moving to change the way it delivers care through improving data systems and doctors reimbursement for superior outcomes.

References

HCA.  10-K Report. Available at: www.sec.gov.

HCA.  Financial Information.  Available at: http://www.hca.com