After suffering weak patient volumes in 2020 due to COVID-led suspension of non urgent care procedures, things are now looking up for the Zacks Medical-Hospital industry. Patient admissions are coming back as the grip of coronavirus is loosening. Besides, stringent cost-control measures and government grants helped hospital companies hang on to the difficult times and minimized damages to a certain extent. Hospital companies are utilizing telehealth services to increase efficiency by reducing waiting time and lowering treatment costs. Leading hospital companies like HCA Healthcare Inc. (HCA – Free Report) , Universal Health Services Inc. (UHS – Free Report) , Tenet Healthcare Corporation (THC – Free Report) and Acadia Healthcare Company, Inc. (ACHC – Free Report) are set to benefit from these developments.
The Zacks Medical-Hospital industry comprises for-profit hospital companies that provide healthcare facilities through different types of hospitals, such as acute care, rehabilitation and psychiatric. These hospitals entities are engaged in internal medicine, general surgery, cardiology, oncology, neurosurgery, orthopedics and obstetrics, mental health care, and diagnostic and emergency services among others. Hospital revenues depend upon inpatient occupancy levels, the medical and ancillary services ordered by physicians and provided to patients and the volume of outpatient procedures. Hospital companies receive payments for patient services from the government under the Medicare program, Medicaid or similar programs, managed care plans (including plans offered through the American Health Benefit Exchanges), private insurers and directly from patients.
3 Hospital Industry Trends to Watch Out for
Volumes Revive as Covid Wanes: Recovery of demand and deferred volume is visible in 2021, as the COVID intensity subsided. As more vaccines are provided, hospital companies are hopeful that patient volumes and results could strengthen through the year ahead. Rating agency Moody’s is of the view that patient volumes are expected to fully recover by late 2021 or early 2022. The rating agency also holds a stable outlook for the US for-profit hospital industry, which reflects EBITDA growth in the low-single digits over the next year or so as patient numbers gradually return to the pre-COVID levels.
Aging Population to Drive Industry Growth: As seniors account for an increasing percentage of the total U.S. population, we believe that demand for hospital services will continue to shoot up. According to the U.S. Census Bureau’s revised (in 2020) census between 2016 and 2060, the number of individuals aged above 65 years are projected to be one of the fastest growing segments of the US population that climbed from 15% to 23%. The Bureau expects this segment to surge approximately 92% to 75 million from the total U.S. population, which is projected to increase 25% during the same time period. This demographic change along with the rising incidence of diseases will drive the industry’s growth.
Cost-Control Measures/Telehealth to Save Margins: Hospital companies deepen focus on cost management to aid margins when revenue growth is still catching up. Companies are experiencing an upward pressure on labor costs due to challenges related to nurse staffing, which were caused mostly by COVID-related exigencies that saw a spike in the infection across most hospitals in the country. Hospitals are utilizing the telehealth domain to heighten their efficiency by limiting the patients’ waiting time and trimming their treatment costs. Industry leader HCA Healthcare is already using telehealth services in outpatient clinics, inpatient treatment, urgent care, and patient and employee monitoring