The third quarter marked contrasting financial outcomes for four of the largest for-profit health systems in the country.
While HCA Healthcare and Tenet Healthcare reported strong growth in operating income and improved margins, Community Health Systems struggled with substantial operating and net losses amid rising expenses. Meanwhile, Universal Health Services achieved steady revenue growth and a notable improvement in its operating margin, despite expenses continuing to rise.
Leaders from each system highlighted the factors driving their results, from capacity expansion and operational efficiencies to challenges with volume growth and expense control.
Here is a breakdown of each health systems' financial results in the third quarter:
1. Nashville, Tenn.-based HCA Healthcare reported an operating income of $1.9 billion (10.9% margin) in the third quarter, up from $1.6 billion (10.1% margin) during the same quarter last year. Third-quarter revenue hit $17.5 billion, up from $16.2 billion last year. Expenses were $15.6 billion in the quarter, up from $14.6 billion. Net income for the 187-hospital system was $4.3 billion, compared to $3.6 billion in the same period in 2023.
"Like the first half of the year, the results for the third quarter were strong and reflected solid revenue growth and margin improvement," CEO Sam Hazen said during the company's third-quarter earnings call. "By the end of this year, we expect to have added approximately 600 inpatient beds and 100 new outpatient facilities, bringing our total sites of care to over 2,600."
2. Franklin, Tenn.-based Community Health Systems posted a $205 million operating loss (-6.6% margin) in the third quarter, down from an operating income of $173 million (5.6% margin) during the same period last year. Third-quarter revenue for the 69-hospital system hit $3.09 billion, an incremental increase from $3.86 billion in the prior-year period. Expenses in the quarter were $3.3 billion, up 13.1% year over year from $2.9 billion. After accounting for interest expenses and nonoperating items, CHS reported a $391 million net loss in the third quarter, compared to a $91 million loss during the same period last year.
"Our teams continued to execute well in a number of areas, advancing key priorities related to volume growth, operational improvements and patient outcome success," CEO Tim Hingtgen said.
3. Dallas-based Tenet Healthcare reported an operating income of $1.1 billion (21.3% margin) in the third quarter, nearly double the $568 million operating income (11.2% margin) posted in the third quarter of 2023.
Third-quarter revenue increased 1.1% year over year to $5.12 billion while expenses decreased by about 2.3% to $4.45 billion. After accounting for interest expenses and nonoperating activities, Tenet ended the third quarter with $472 million in net income, compared to $101 million in the same quarter in 2023.
"Our businesses continue to produce strong results and generate robust free cash flow with same store revenue growth and profitability well above our expectations due to the focused execution of our strategy and disciplined operations," Chair and CEO Saum Sutaria, MD, said. "We have furthered our portfolio transformation and are well-positioned to deliver enhanced value to our patients, physician partners and shareholders."
4. King of Prussia, Pa.-based Universal Health Services posted an operating income of $384.2 million (9.7% margin) in the third quarter, up from the $285.4 million (8% margin) in the same quarter last year. Third-quarter revenue increased 11.2% year over year to $3.96 billion while expenses rose 9.2% to $3.58 billion. Net income for the quarter hit $258.7 million, up from $167 million in the third quarter last year.
"As we anticipated, acute care volumes have moderated somewhat and have gradually begun to resemble the patterns we experienced before the pandemic," CFO Steve Filton said during the company's third-quarter earnings call. "Adjusted admissions to our acute hospitals increased 1.5% year-over-year, with surgical growth slowing. Overall revenue growth was still a solid 8.6% excluding the impact of our insurance subsidiary. Meanwhile, expenses were well controlled. Specifically, the amount of premium pay in the third quarter was $60 million, reflecting a 12% decline from the prior year quarter."