The country’s three largest for-profit health systems — HCA Healthcare, Tenet Healthcare and Community Health Systems (CHS) — all posted their second quarter earnings recently. HCA and Tenet reported net incomes for the quarter, while CHS posted a net loss. All three health systems found themselves in a better financial position in Q2 2023 than they were in Q2 of last year, driven in large part by declining contract labor expenses.
As of 2020, these three public health systems accounted for about 8% of hospital beds in the U.S.
HCA, the country’s largest for-profit hospital chain, reported a net income of $1.19 billion for Q2 2023, which is up 3.3% from the $1.155 billion net income it posted in last year’s Q2. The health system’s Q2 2023 revenues totaled $15.86 billion, compared to $14.8 billion in Q2 2022.
The company’s expenses totaled $14.05 billion in this year’s Q2, with salaries and benefits accounting for $7.3 billion.
For the first half of this year, HCA reported revenues of $31.45 billion and a net income of $2.556 billion, compared with $29.76 billion and $2.43 billion in the first half of 2022.
As for the country’s second-largest for-profit health system, Tenet posted a net income of $123 million in Q2 2023, a significant increase from the $38 million net income the health system reported in Q2 2022.
Its Q2 2023 revenues were $5.1 billion, compared to $4.6 billion in Q2 2022. The health system’s overall expenses rose as well, resulting in an operating margin of 11.9% for both Q2 2023 and Q2 2022.
Tenet posted revenues of $10.1 billion and an operating margin of 11.9% for the first half of this year, compared with $9.3 billion and a margin of 12.8% for the first half of 2022.
Unlike HCA and Tenet, CHS reported a net loss in Q2 2023. However, its losses have been much less severe this year compared to last year.
The hospital chain posted a net loss of $38 million, down from a net loss of $326 million during last year’s Q2. CHS’ loss in Q2 2023 took its total net loss for the first half of the year to $89 million, compared to a loss of $327 million for the first half of 2022.
The health system’s revenue was $3.1 billion in Q2 2023, compared to a revenue of $2.9 billion in Q2 2022.
All three of the hospital chains said that their reduced utilization of contract labor has helped them improve earnings. For example, HCA reported that its contract labor expenses went down 20% in Q2, and Tenet said its contract labor costs dropped down to just 4.3% of the health system’s total expenses for salaries and benefits.
Additionally, CHS said it cut its contract labor expenses down by 50% in Q2. The hospital chain posted $1.3 billion in salaries and benefits expenses for Q2 2023, with contract labor costs accounting for $74 million — compared to contract labor expenses totaling $150 million in Q2 2022.
A report released last week further supports this trend, revealing that the share of hours worked by contract nurses as a percent of hospitals’ overall nursing hours dropped from 12.4% in March to 8.3% in June.