HCA Healthcare at Barclays Conference: Navigating Policy and Growth

On Tuesday, 11 March 2025, HCA Healthcare (NYSE: HCA) presented at the Barclays 27th Annual Global Healthcare Conference. CEO Sam Hazen outlined strategic priorities, balancing policy uncertainties with growth ambitions. Despite facing challenges, HCA is leveraging operational resilience and market share expansion.

Key Takeaways

• HCA identifies healthcare policy as its top enterprise risk, focusing on ACA, Medicaid, and Medicare reforms.
• The company achieved 4.5% to 5% growth in same store adjusted admissions.
• Investments in outpatient facilities and network expansion are central to HCA’s growth strategy.
• Recovery efforts post-Hurricane Helane were swift, highlighting operational resilience.
• HCA targets a 30% market share in Florida, underscoring its growth in key regions.

Policy and Risk Management

• HCA views healthcare policy as a critical risk, with potential reforms impacting ACA, Medicaid, and Medicare.
• The company emphasizes maintaining healthcare coverage and appropriate reimbursement.
• Strategies to mitigate risks include supply chain diversification and domestic sourcing.

Operational Performance and Strategic Initiatives

• HCA reported a 4.5% to 5% increase in same store adjusted admissions, driven by population growth and chronic conditions.
• The company is investing in complex service lines, such as trauma and bone marrow transplants, improving the case mix index by 5% to 6% since 2019.
• Efforts to enhance patient care include technology investments and AI-driven predictions for post-acute care.

Market Share and Growth

• HCA’s market share in Florida stands at 28%, with a target of 30%.
• The company is expanding outpatient clinics, aiming for 18-20 per hospital by the decade’s end.
• In the DFW area, HCA holds a 22-23% market share, with significant population growth expected.

Hurricane Helane and Recovery Efforts

• HCA’s rapid response to Hurricane Helane enabled a swift transition from crisis to stability in under three days.
• Recovery in Asheville is progressing well, although the broader impact on rural healthcare is still being evaluated.

For a complete understanding of HCA Healthcare’s strategies and insights, please refer to the full transcript below.

Full transcript - Barclays 27th Annual Global Healthcare Conference:

Andrew: With CEO, Sam Hazen of HCA Healthcare as well as Vice President of Investor Relations, Frank Morgan. Guys, thanks for joining us virtually today.

Sam Hazen, CEO, HCA Healthcare: Thank you, Andrew. I appreciate your understanding on the rationale for everything.

Andrew: Absolutely. Glad we could accommodate. Well, there’s a lot going on, a lot of attention on Medicaid reform and provider taxes from Congress and investors lately. It’d be helpful, Sam, to get your perspective on the direction that the policy discussion is taking and how you’re thinking about the risk, not only to HCA, but also the broader hospital industry?

Sam Hazen, CEO, HCA Healthcare: Well, Andrew, obviously, there is a lot of discussion in Washington, primarily around healthcare policy and we’ve identified it as an organization as our number one enterprise risk just because there’s uncertainty and there’s vagaries with respect to what the Trump administration has put out as far as their healthcare policy. And there are three categories that I would say are on our radar. The first category with respect to policy is a known fact and that is that the enhanced premium tax credits that were passed during the COVID pandemic are due to expire at the end of twenty twenty five. And we believe there’s good rationale for the government to want to continue those, refine them where they need to be refined, yes, but to continue them in a way that ensures coverage continues for many family members who are out there, families and individuals who benefit from the exchanges. So we’re working that.

There’s a receptivity to the discussion. There’s still a lot of time between now and the end of the year. So that’s one category. The second category you mentioned, Andrew, is Medicaid. There have been discussions about the need for Medicaid to be reformed in some regards, adjusted in possibly others.

And it’s really early in what that means. I’m actually in D. C. This week and trying to gain a better perspective on what certain legislators are thinking around Medicaid and maybe some pathways forward that would be appropriate for Medicaid programs, but protect the industry in a way that industry needs to be protected. And then the third area for us is clearly around what happens with Medicare and are there any particular changes to the regulatory environment or the reimbursement environment there.

So we’ve got three areas of focus with respect to our government affairs agenda and we are spending a lot of time trying to both educate and make legislators and administrative people aware of possible options to achieve certain objectives and not necessarily do any significant damage in the process. I will say it’s still very early, Andrew. For us, our big focus is on maintaining coverage. We think that’s good for communities. It’s good for provider systems.

And it’s really good for overall population health. Without coverage, the system really breaks down for families and individuals. And so we’re promoting the idea of coverage being a priority, obviously appropriate reimbursement being the second priority for us.

Andrew: Great. And during any period of stress, whether it be COVID, natural disasters, policy, HCA has shown remarkable resilience. How does that shape your thinking around potential reform and what are some of the resiliency efforts we might see should any of these unfavorable policies unfold?

Sam Hazen, CEO, HCA Healthcare: Well, we have developed, I think, I’ll call it a quiet confidence with respect to being able to navigate through difficult periods of time. We did that, as you mentioned, Andrew, with the pandemic. We challenged ourselves going into the pandemic with coming out on the other side, being a better organization than we were going in. We think we achieved that. We think we achieved it organizationally where we have a better structure in our company.

We have our culture that’s been advanced on how we dealt with people. I think the reputation with key stakeholders has been improved. So organizationally, we positioned ourselves for that. And the reason I talk about that is organizational resilience, I think, is very important in whatever circumstance we’re having to deal with. And we’ve demonstrated, I believe, an ability to keep our organization structured appropriately and aware of circumstances and prepared to deal with the reality, whatever the reality is.

The second area for us is really around operational resilience. And by that, I mean, what areas of our operations can we improve today or put on a sort of a directional course to advance in a way that’s going to keep our business where it needs to be. Technology is a piece of that. How do we infuse more technology into our business to make it more effective, more efficient? How do we create better asset management through throughput and capacity management?

How do we think about capital allocation possibly slightly different? All those things I think play into operational resilience. I don’t think it changes our core model. Our model is built on servicing demand for healthcare. We continue to believe that demand is going to be there and be strong.

We said that at our Investor Day a couple of years ago, Andrew, that we saw long term demand for healthcare in the 2% to 3% zone per year. And then the third area is financial resilience. And with financial resilience, we’ve improved our balance sheet significantly over the last five years. Our balance sheet is in the best position. It’s been in a long time.

And so that provides a platform. But in addition to that, we’re looking at cost initiatives that we can execute on that will give us a response, if you will, to coverage dislocation or to reimbursement changes and so forth. And we’re looking at where do we have redundancies in our organization, how can we benchmark against best practices a little bit more, what does technology do to our efficiency. Again, case management and asset throughput management all play a part in that. So those are some things that we’re doing to develop resiliency and it’s more than just one item, Andrew.

It’s broad based resiliency. I think it’s necessary. And we’re drawing upon some of the lessons again that we learned during COVID and carrying those lessons forward around transparently communicating with our key stakeholders, making sure people understand our priorities and then executing with purpose and speed to get to outcomes. And that’s who we are as a company and we’ll deploy those trait to deal with whatever comes at us during this uncertain period.

Andrew: Sam, you mentioned the three areas of focus on the policy front ACA, Medicaid and Medicare. What exactly did you mean by Medicare? Is that in reference to site neutral reform? And if so, what are you monitoring from that perspective?

Sam Hazen, CEO, HCA Healthcare: Well, I think that’s the main area, Andrew, that’s out there. The Trump administration said they’re not going to touch Medicare. We don’t know what that means exactly. Does that mean from a beneficiary standpoint? Does that mean from a provider standpoint?

Does that mean from a Medicare Advantage payer standpoint? We don’t really know what that means yet. There have been discussions about site neutral payment reform and that has some implications. There’s different versions of that. There’s what I’ll call a light version where it has a very small impact on HCA, has more of a broader impact on academic medical centers and others.

There’s medium impact items depending. And then there’s ones that are heavier impact for us. But that requires significant change in philosophy within the Medicare program and we don’t see a high likelihood of that. So we think we’re somewhere in the light to medium kind of sort of implications with site neutral as a possible item for Medicare reform. But again, it’s really early.

I don’t even think Doctor. Oz has been sort of approved yet as the administrator. So there’s not really been a lot of effort at this particular juncture.

Andrew: Great. And then tariffs are another issue currently being contemplated by the administration. How do you think about the risk of that for your business? Do you have enough visibility into where your supplies are sourced to measure the potential risk?

Sam Hazen, CEO, HCA Healthcare: We do. We went through some level of tariffs in the first Trump administration and that forced us to rethink aspects of our supply chain. So we started to diversify our supply chain vendors a little bit with that contracts for the near term where we have very little risk with respect to pass through costs related to tariffs within our supply chain partnerships. Now in the intermediate run, that could become a negotiation if in fact there’s sort of sustained tariffs. And then we have some flexibility domestically to reposition some purchasing here and there.

But we are in a sort of an effort to understand, okay, where are the risks within our supply chain and how much exposure exists. I don’t know that we know. It’s fairly fluid as you know with these tariff policies that are being discussed. It has some implication with our capital project. Fortunately, most of our steel is sourced domestically, so we don’t have a lot of steel tariff exposures.

So Andrew, it’s fluid. And we have some protections in the contracts that we have today. We have some protections with respect to domestic producers that provide supplies and certain equipment needs for us. And then we have contract control that will give us some near term relief, but we’ll have to deal with maybe some intermediate pressures if these tariffs sustain themselves.

Andrew: Great. And then let’s move on to the fundamentals. Over the last two years, HCA has been able to deliver 4.5% to 5% same store adjusted admissions growth, which signals elevated demand in a post pandemic world. What are the fundamental drivers of that demand and what gives you confidence that volumes can be sustained in the at least 3% to 4% range?

Sam Hazen, CEO, HCA Healthcare: We’ve guided this year to a higher level of volume growth in our markets than what we had anticipated long term. A little bit less than what we actually experienced in 2024, but still above our long term guidance. I think when you pull up for ACA, Andrew, I think you have to start with the fact that the portfolio of markets that we have in our company are markets that have inherent growth attributes. They have better than national average population growth trends, number one. Number two, we have aging baby boomers in our markets as far as being retirement communities and so forth that’s driving demand.

And unfortunately, chronic conditions still exist in The U. S. And it lifts demand. Currently, we see those three factors driving demand at least our long term guidance and possibly more. Now we need to get through this year and understand whether or not our assumptions still hold for ’26 when you start thinking about some of the federal policy dynamics that are out there.

I think one aspect around coverage that’s important and I’ve mentioned this before on our earnings call, coverage we believe creates a little bit of lift to demand. So the more people who are covered, the more likely they’re going to get preventative care, diagnostic care and so forth and that lifts up demand slightly. That’s why coverage we think is very important to families, community health and really the demand equation inside of our space. So those three areas, population growth, aging baby boomers and the chronic condition situation provide us with confidence that our long term growth prospects are where they need to be. And then possibly with coverage, if it’s maintained, we could see a little bit of the elevated demand with respect to that long term guidance.

Andrew: Great. And then throughout 2024, we saw an acceleration of high dollar cost treatments across the healthcare system, including specialty drugs, advanced imaging and infusions. What’s been your experience as it relates to this? Have you seen an uptick in higher acuity patients or procedures that’s consistent with that trend?

Sam Hazen, CEO, HCA Healthcare: Yes, it’s the short answer. And this has been something that’s been sustained over, let’s just say, the intermediate run. If you look at where our case mix index, which is a proxy measure for our inpatient acuity representing sort of the sickness severity of our patient population. It’s grown, I think, five percent or six percent since 2019. And Frank, you can correct me if that number is off, but it’s been a fairly sizable increase.

And that was particularly elevated during COVID. We were thinking to be perfectly candid that it might back up a little bit post COVID, but that’s not been the case. It sustained itself and actually grew this past year modestly over 23. Now some of that is a function of our strategy, where our strategy is to continue to build out more complex service line capability. And that’s with investments in clinical technology with certain physicians with using our network, Andrew, to create demand for more complex care and fundamentally keep the patient in the system if we can and be all things to all people.

So that resulted in program development in level one or level two trauma, program development in bone marrow transplant, just giving you examples. All of this yields in sort of the main for HCA, a slight lift in complexity of service offerings. The other thing, Andrew, that I think is very important to understand is demand for healthcare in the rural parts of America continue to grow just like urban markets, maybe not at the same level, but the ability for people to supply healthcare in those markets is diminishing and denigrating. And what that’s doing is pushing rural demand into urban demand. For HCA, about 18% of all of our admissions come from rural America into our facilities.

And typically, those are patients who are sicker. So the acuity of those patients is above average and it drives a bit of complexity into our facilities as a result. The last thing I would say on this is some of the lower level stuff gets moved out to outpatient or managed by drugs. And so you have a little bit of a push away on the low end. And then you have program development demand from the rural markets, aging baby boomers driving up complexity.

And for us that means more revenue per patient. And we’re a fixed cost business. And so when you’re generating more revenue per patient, it generates a greater absolute contribution margin and we wind up dribbling that down to the bottom line hopefully. And so that’s how the model works for us and we have the same asset base in most instances and it produces a really positive return on capital where we’re able to execute on that and deliver that kind of service for our communities and for our facilities.

Andrew: Right. And despite that higher level of acuity that we’ve seen, you’ve made some really nice improvements in average length of stay. I mean, a lot of things can impact that number, including acuity, productivity and post acute readiness. So what’s been the primary drivers of that improvement and where do you think that number can go near term?

Sam Hazen, CEO, HCA Healthcare: I think the primary driver has been what I alluded to earlier and that is better execution. We have been focused on it as a team. We have invested in technology. We’ve reorganized to what we call a support model approach to case management. We’re using AI in some cases to help predict what patients might go to skilled nursing, what patients may go to home care, which patients are likely to go to home, so we can interact with them with a head start.

All of that helped us achieve better average length of stay on a growing acuity base. We still have room to go. We have wide variation in execution in our company today. We have some best in class performers that could produce 10% to 15% better performance if we could replicate that across the company. That’s not easily done, but we’re trying to leverage how is that facility or group of facilities organized, what systems do they have in place from an execution standpoint and how are they approaching accountability to get to that result and how do we transport that to another 150 hospitals or whatever the case may be.

So those are things we’re working on. We need to work with the Medicare Advantage payers and we are in helping to deal with the variances that we see in the same type of Medicare patient versus a Medicare Advantage patient. And I want to say it’s 20% to 25% less efficient for us with a Medicare Advantage payer in getting them either home or into a post acute setting. So we’re working with them to try to address those variances and that would be a very helpful and accelerating area if in fact we could accomplish there what we’ve accomplished for the traditional Medicare beneficiary.

Andrew: Great. Moving on, HCA has dealt with a number of hurricanes over the years, including Katrina, Harvey, Irma and most recently Milton. How would you compare and contrast Milton versus some of those previous experiences? And what’s the latest on the recovery efforts underway at Mission Hospital in North Carolina?

Sam Hazen, CEO, HCA Healthcare: So let me speak to Hurricane Helane, which was roughly two weeks before Hurricane Milton. And Andrew, it was a redux of Hurricane Katrina. I was on point for HCA in 2019, ’1 of the 02/2005 with Hurricane Katrina. And then three weeks later, we had Hurricane Rita, which hit Houston really hard. So this year, we have hurricane Helene.

I told my wife on Saturday, I said, oh my goodness, this is hurricane Katrina all over again. And she’s like, what are you talking about? It’s in North Carolina. And in the same set of circumstances, because we lost power, water and sewer, we were like, oh my goodness, we’re going to have to evacuate a hospital with seven fifty patients in it. That was Saturday.

On Wednesday, we had drilled three wells. We had worked with our water vendor and we were fortunate enough that we were connected to a sewer treatment facility that wasn’t devastated and we were able to go from crisis mode to, I’ll say, stability in less than three days through the efforts of our team. We drilled three wells. I mean, it was an unbelievable effort. So the devastation in Western North Carolina was like New Orleans, especially as you move deeper into the mountains.

And we have five hospitals in the rural counties. Those hospitals have come back a little bit. We’re still trying to understand what’s happening with population in the rural parts of Western North Carolina. In Asheville, which is where our Mission Hospital and other facilities are, we’re as busy as we were pre pandemic. And so the community from a healthcare standpoint has recovered.

What we don’t understand though, Andrew, is that rural healthcare coming to Asheville or is it Asheville city demand being what it was pre pandemic? There was such devastation to road infrastructure, homes in certain cases. We weren’t sure what the employment environment was going to be like in Asheville. And so it’s still too early to call that. But we’re in a good spot.

Our hospital is functioning fully. Our outpatient facilities in Asheville are functioning fully. Our behavioral health and rehab facilities functioning fully. And so we’re a little bit ahead of where we thought we might be with respect to the Asheville recovery. But it’s too early to call what I call the macro conclusion on what overall population trends are going to be in Buncombe County and how that’s going to affect our business more in the long run.

Andrew: Great. And if I’m hearing that correctly, it sounds like occupancy is ahead, but you might be pulling from rural areas such that payer mix might be a little bit of a headwind and that’s what we should look to improve over the next coming months.

Sam Hazen, CEO, HCA Healthcare: Yes. But I mean, you got to understand, I mean, that’s one hospital inside of 190 for us. And it’s meaningful in one sense, yes, because we have fundamental responsibility as infrastructure to be there and have services and availability and capacity as best we possibly can in a regulated state to meet the needs. And we’re trying to do that with linked to state management, staffing, all the things you would expect. But yes, those are the things we’re studying.

It’s early, but our teams have done a wonderful job and it appears that maybe there could be a recovery that’s a little bit ahead of what we thought.

Andrew: Great. Sam, last year at this conference, we heard from one of your regional leaders down in Florida about your relentless folks here to capture 30% market share by 02/1930. Where does that market share sit today? And what do you think is needed from an operational and investment standpoint to drive that outcome? Well, I’m The

Sam Hazen, CEO, HCA Healthcare: most current data we have today puts us at about 28% market share. The most current data we have today puts us at about 28%. So we picked up market share through a very dynamic period with the pandemic. And it was hard to really understand market share during 2021 and 2022 because we had COVID surges that we were dealing with and those would come and go from one hospital to another, not just in our system, but competitor systems. So here we are at 28%.

We’re also in a situation where we’ve added to our competitive positioning. Our competitive positioning is better than it was pre pandemic. We’ve added outpatient facilities. We bought some outpatient businesses. We bought a few hospitals during that time period and we continue to invest heavily in who we are.

Developing our networks is one of our primary objectives as a company and expanding the capabilities of our networks and creating even greater access. So you see us, Andrew, adding a lot of outpatient facilities to our network. I think we’re up to 13 or 14 clinics or facilities to every hospital. We think we’re going to be pushing 18 to 20 by the end of the decade just because we want to take the care closer to the patient, make it easy for the patient to interact with the system have different price points for the patient, but ultimately start them somewhere in the HCA system. And then from there, we want to integrate our networks very tightly, so that if a patient does need more acute services, we’re back to the complex service offering, we can provide that care somewhere in the HCA system.

So we’re investing in that piece too and it’s requiring us to invest capital in our hospitals as well as our outpatient footprint to advanced bed. I mean, we’re running the company today, Andrew, at roughly 73, 70 four percent occupancy, which is almost a high watermark for the company and that’s on 42,000 beds or so. So very significant utilization of our beds and we need to have capacity available in order to treat the demand that we think. So we’re investing in our organic model. And that means building out the networks that we have today, taking advantage of population growth, overall demand growth and the position and brand that we already have and extending that further into these communities that are growing.

I mean, I’ll just point to DFW as an example. I mean, there’s 8,500,000 to 9,000,000 people in the healthcare market for DFW. In the next ten to fifteen years, we think it’s going to grow 1,000,000 to 1,500,000 people. And so we have 22% market share in DFW, Twenty Three Percent somewhere in that zone. We can push into that growth and have substantial growth in that division for our company.

I mean, I could point to Austin, Texas, Salt Lake City, Las Vegas, all of Nashville, Tennessee, same dynamic. And I’m back now to our portfolio having this built in sort of demand that’s inherent in most of the communities that we serve and using that and using our existing position to invest capital, we think in a very conservative way, a very predictable way and one that’s been reliable for producing solid returns and still continue to accomplish the objectives we want. And that we believe with deep execution can get us to 30% market share.

Andrew: Great. With that, we are out of time. Sam, really appreciate all your thoughts in a dynamic environment here. To everyone in the audience, please enjoy the rest of the conference. Thank you.

Sam Hazen, CEO, HCA Healthcare: Thank you, Andrew.

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