🏥 For-Profit Hospital Q1 Breakdown

Key hospital and health system takeaways from HCA, Tenet, UHS, and CHS in Q1

PARTNERED WITH Happy Thursday, Hospitalogists!   I'm at the HIMSS Summit25 today in Nashville, so if you're around, say hello.   Today's newsletter contains all of the highlights and key themes from the for-profit hospital operators (excluding Ardent - they report next week) - everything you need to know across tariff policy mitigation, labor dynamics, volumes, and more.   Let's dive in. Was this email forwarded to you? Subscribe Here SPONSORED BY COMMURE Big news for Epic users: Commure's Ambient AI is now officially listed in the Epic Toolbox. This means radically faster access to integrated, voice-powered documentation for health systems in both Epic Hyperdrive and Haiku. Embedded directly within Epic's clinical workflows, Commure's Ambient AI listens, documents, and adapts allowing clinicians to focus on care, not clicks. It's ambient AI with an easy button: IT and clinical teams benefit from a faster rollout, minimal disruption, and trusted performance from a proven partner. Explore the blog to see how integration puts smarter documentation just a click away. Click here for smarter documentation. 1. BLAKE'S BREAKDOWN Going deeper on an interesting topic, theme, or trend  Hospital Q1 2025 Earnings Themes: Key Takeaways and Scorecard Expanding margins, rising acuity, favorable payor mix from exchange volumes, decreased length of stay (impacted a bit by flu season), a low point in the labor market, operating expense leverage, strong utilization and same-store volumes, murky tariff and policy on Capitol Hill, supplemental payments flux, and more updates happened this quarter from the for-profit hospital crop.   Here's what you need to know. HCA remains the volume bell-whether. Broad market-share gains, more inpatient growth than they can build for, and a strong ambulatory outlook to boot keeps HCA in the driver's seat along with favorable payor mix, better ED throughput/LOS management, and rising acuity in HCA hospitals. Tariff exposure is currently minimal.   Tenet also crushed Q1. USPI is firing on all cylinders, adding 6 new centers and a partnership in Midland, Texas. It's delivering the best incremental margin thanks to USPI mix shift (12% growth in total joint, with huge rise in revenue per case growth!!) and labor cost containment. Adjusted EBITDA margin grew 320 bps to 22.3%!!! The hospital portfolio grew admits 4.4% on a same-store basis. Its leverage is historically low at 3.1x; ASC pipeline healthy; likely guidance lift once Tennessee DPP clears.   UHS showed acute-care strength behavioral health volumes lagged from weather and Leap year effect. Still, reimbursement came in incredibly strong at 5.8% growth in Q1 with favorable contracts from managed Medicaid partners. New-build hospitals are ahead of plan, which will matter more in 2H once Medicaid cash timing normalizes.   CHS is the turnaround laggard. Volume green-shoots exist, but payor mix drag and its debt load (what's new) with leverage > 7× keep equity optionality high. Continued execution on its (evergreen) divestiture plan and cost savings are critical catalysts. Margins Expand in Q1… …Driven by Strong Broad-Based Volume Growth For-Profit Hospital Operator Key Themes from Q1: Utilization Trends: Demand for higher-acuity service lines (cardiac, ortho, trauma) stayed firm; flu raised Q1 medical volumes across the board.   Favorable Labor Market: Each operator posted significant leverage over its salaries and benefits. Huge theme for most of 2024 and now here in 2025. Wage inflation has cooled; contract labor comprises less than 5% of cost for all operators. Recruiting momentum and internal nursing schools were highlighted as key contributors when in reality there's probably a bit more going on under the hood, maybe with the economy, maybe with post-pandemic trends. I would love folks who are closer to labor environment to chime in here with more nuanced takes on what you think is going on. Still, kudos to these players for working on retention and nursing opportunities. But having SWB at something like 44% for HCA and 40.6% Tenet is wild. That is massive expense leverage.   Tariffs, Cost Containment: Analysts and execs are honed in on the rapidly evolving supply-chain environment as tariff rhetoric grows. When asking all four how the operators are hedging potential China tariffs, teams responded largely with locking in fixed price contracting and shifting to domestic sourcing.   Supplemental Payments Noise: Timing noise everywhere as state and federal policies are a wildcard - Tennessee being a big catalyst for HCA. HCA saw an $80M benefit in Q1; Tenet is still expecting $35M from Tennessee (not yet approved); UHS was paid in April from Nevada, still waiting on DC & TN; CHS awaiting NM & TN (~$100-125M upside).   The Last Year of Exchange Growth: ACA volumes continue as a significant revenue mix tailwind. Tenet exchange admits +35 % YoY (7 % of revenue). HCA 22 % growth. UHS +20 %. CHS < 6 % of revenue but growing.   Capital Allocation and M&A Focus on Ambulatory, De-novo Inpatient Buildout: General use of capital for hospitals includes 1) Growth cap-ex, 2) ASC or tuck-in M&A, 3) De-leverage or buyback. HCA & Tenet both heavy repurchasers. Tenet earmarks $250M for USPI annually and constantly notes a 'robust pipeline' (which there is). CHS can't get out of its own debt sludge and is funneling asset-sale proceeds to offload. UHS continues share repurchase even while building new hospitals. Also, HCA and Tenet continue to stay deleveraged (AKA, ebitda to total debt ratios) at a historically low level for these players.   Guidance and Outlook Fogged by Policy Outlook: Interestingly, despite the pretty strong Q1 with all things considered, management teams didn't raise guidance. This decision speaks to the fluidity of the uncertain policy situation, because hospitals only have so many levers to pull. There's only so much you can do if the Trump Admin cuts Medicaid reimbursement, services, ACA subsidies, implements site neutral reform, heightens and intensifies tariffs, and more. Still, if current patterns hold you should expect to see mid-year guidance increases especially given how big Tenet crushed Q1.   Policy Sensitivity: China-source supplies and effects of tariffs; ability for hospitals to mitigate change in supply chain / costs Medicaid flux Supplemental payments and whether the Trump Administration addresses them Exchange volumes headed into 2026 Medicare Advantage penetration rates in local markets, denials Other Hot Buttons this Quarter: With how low the contract labor environment seems to be, and with for-profit players exhibiting their strength over that portion of the income statement, analysts questioned the sustainability of keeping SWB this low. I'm inclined to agree and have to think the pendulum…at some point…swings back to a more normalized spot. But the question is…maybe this labor environment is the new normal for the hospital operators who are able to stay ahead from a position of strength. In general analyst Q's centered around margin sustainability, contract-labor durability, Medicaid DPP timing, tariff exposure, the exchange subsidy cliff, how long the total-joint runway is for ambulatory growth (USPI), behavioral volume cadence (UHS), and pacing of CAPEX. COMMUNITY UPDATE The latest from inside my community of healthcare thinkers 🏥 Q1 left a mark on healthcare—what does it mean for the rest of 2025? 🏥   We're diving into it with Grant Hesser, Eric Epstein, Jeff DelVerne, and Drew Wozniak. Get the unfiltered analysis straight from the source.    Register here! https://lu.ma/8ob6ndxd?utm_source=Newsletter For more exclusive content like this and thoughtful conversations / networking around healthcare issues that matter across siloes, join the Board Room community! Reply to this email to ask any questions or learn more from me. Join my Community SPONSORED BY THE GARAGE I've seen it too often, healthcare orgs drowning in data but starved for insight. EHRs, HIEs, payer systems... all siloed, speaking different languages. Clinicians juggling multiple platforms, piecing together incomplete patient histories; care managers making decisions with limited or inaccurate data. It's inefficient, costly, and compromises care. But it's also a solvable problem. That's why I believe in the platform Bridge. It unifies all that fragmented data into one actionable view, streamlining workflows and improving care (with ROI in under 6 months). Don't let data-rich be insight-poor. Bridge the gap today. Thanks for the read! Let me know what you thought by replying back to this email.   — Blake   Share Hospitalogy, Earn Rewards Have friends who'd love Hospitalogy too? Click the link below to share Hospitalogy with your friends and earn awesome rewards! PS: You have referred 0 people so far Share Hospitalogy! Get your brand in front of 43,000 executives and healthcare decision-makers. 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