HCA Healthcare Plans Return of $6 Billion in Pandemic Relief, Loans
October 08 2020 - 8:20PM
Dow Jones News
By Melanie Evans
HCA Healthcare Inc., one of the nation's largest hospital
chains, said it would pay back federal pandemic relief, the latest
indicator of the $1 trillion hospital sector's rebound from
pandemic-inspired disruption caused by suspended surgeries and
widespread lockdowns.
The Nashville-based company said it would return the roughly
$1.6 billion it received from the relief Congress funneled to
compensate hospitals and doctors for higher costs and lost revenue
in the pandemic. Revenue plunged, as hospitals suspended many
procedures in the spring to prepare for a surge of Covid-19
patients.
Congress approved $175 billion in direct aid through relief
packages, including the Coronavirus Aid, Relief, and Economic
Security Act, as hospitals raced to preserve cash.
Postponed medical procedures left some small hospitals
struggling to make payroll. Many larger hospital systems moved
swiftly to conserve cash, lining up bank credit and making cuts to
spending, including through layoffs and furloughs. Meantime, costs
increased with rising prices for high-demand medical supplies and
labor, particularly for hospitals in pandemic hot spots.
Congress also created pandemic loans for hospitals by advancing
Medicare payments, which hospitals must eventually repay. Congress
recently extended the repayment deadline. HCA said it would repay
its loans totaling $4.4 billion ahead of schedule, working with
government agencies to return the money.
HCA and other hospital chains rebounded more quickly than
expected from spring losses, moving to restart elective procedures
in late April and early May. Hospitals continued surgery through
new outbreaks of the virus, though with some interruption where
cases surged.
"As the initial immediacy of the emergency has passed, and with
more information, and more experience managing our operations
during the pandemic, we believe returning these taxpayer dollars is
appropriate and the socially responsible thing to do," said HCA
Healthcare Chief Executive Sam Hazen, in a statement.
Federal relief funds lifted HCA Healthcare's second-quarter
profits. Returning the $1.6 billion of relief will reverse $822
million of second-quarter stimulus income, the company said. The
remaining roughly $778 million hadn't officially been claimed.
In a preview of its results, HCA said revenues totaled $13.3
billion in the third quarter, compared with $12.7 billion the same
quarter a year ago. The company released income before income taxes
for the third quarter of about $950 million, compared with $979
million in the same period a year ago.
The move is the latest by HCA to reverse or scale back
cash-conserving measures from earlier in the year.
In late September, HCA, which operates 186 hospitals nationwide,
announced one-time bonuses for employees in hospitals and other
facilities, some of whom saw hours cut as patients stayed away.
The company also said it would restore some lost pay to
administrative staff and forgo planned cuts to retirement
contributions by the company. The changes take effect in
November.
HCA said it avoided layoffs. Some workers moved to other jobs
and HCA paid others reduced salaries during the spring
slowdown.
There are other indicators of the sector's recovery, but it has
not fully bounced back from the pandemic's hit, even with relief.
Hospital hiring resumed in the summer after job losses in April and
May, seasonally adjusted data from the Labor Department show.
However, preliminary figures for September show hospitals shed
about 6,000 jobs.
The pandemic also factored into nearly all of the 14 downgrades
to hospital credit ratings by S&P Global Ratings in the second
quarter.
Write to Melanie Evans at Melanie.Evans@wsj.com
(END) Dow Jones Newswires
October 08, 2020 20:05 ET (00:05 GMT)
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