HCA Healthcare Plans Return of $6 Billion in Pandemic Relief, Loans

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 [e-mail]

(END) Dow Jones Newswires

October 08, 2020 20:05 ET (00:05 GMT)

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