hospital/healthcare provider analysis 7/9/15. hca owns and operates approximately 166 hospitals and...

Hospital/Healthcare Provider Analysis 7/9/15

• HCA owns and operates approximately 166 hospitals and approximately 113 freestanding surgery centers in 20 states and London, England.

• CEO: R. Milton Johnson• History:

– Founded in 1968 to manage Park View Hospital in Nashville– Quickly expanded the scope of its venture by assembling a group of hospitals, in

order to create economies of scale and enhance the quality of care in communities across the country.

– Initial Public Offering (IPO) on NYSE in 1969– 1988 completed $5.3B leveraged buyout and took the company private– 1992 IPO– 2006 again taken private for 33B– 2011 IPO – HCA is composed of locally managed facilities that include approximately 165

hospitals and 115 freestanding surgery centers in 20 states and England

History and Background

2Confidential, unpublished property of Cigna. Do not duplicate or distribute. Use and distribution limited solely to authorized personnel. © 2015 Cigna

Geographic Operations


• 166 Inpatient acute care• 113 Outpatient services: PT/OT, speech

therapy, laboratory services, prosthetics, free-standing surgery centers

• Emergency care • Rehabilitation facilities• Psychiatric hospitals• Physician services

Primary Products and Services


Key Customers:• 100% of HCA’s revenue is derived from urban markets

– Medicare– Medicaid– Commercially insured– Self/pay (uninsured)

Key 2014 changes:• Approximately 5% of all US hospital services occur at an

HCA facility• Uninsured admission dropped 58%• Of the 134,000 federal exchange patients, 62% of them

had no prior treatment at HCA

Key Customers


Patient Mix By Payer Type


• “Highest commitment” (Mission statement?): • To deliver superior quality of care throughout our system for every patient, every day.

Mission and Priorities


• Priorities• Improvement in both patient outcomes and patient service.

– Anticipate reimbursement based on the quality and value of services– New position: Chief Patient Experience Officer

– Responsible for leveraging best practices developed across HCA’s hospitals and other providers.

• Maximize volume metrics– Patient volume, market penetration, breadth of facilities– Leverage size and scale to deploy new technology

– Clinical-data warehouse, big data for predictive modeling and personalized medicine.

– Patient portal to centralize an individual’s health-care history, and ofer suggestions for personalized care to the provider.



• Priorities• Favorable payor mix

– Medicaid• Cost management.• Capital deployment.

– $2.2 billion in capital spending – Three hospitals in 2015– Many surgery centers– Clinics / physician practices– Increase bed and emergency room capacity– Latest in medical equipment.

– Infection control– MSO purchase, collaborating with SCCIPA



Recent Performance around the Five Drivers


- Significant LT Debt $29.3B – an albatross going back to before 2010- Liabilities are $37.7B vs. Assets of $31.2B (-$6.5B)

Cigna HCA HCA PYCash $1,420 $566 $414 Cash Flow $1,994 $4,448 $3,680 Total Revenues $34,914 $36,918 $34,182 Operating Profit $3,304 $3,481 $2,946 Operating Profit Margin 9.50% 9.42% 8.62%Net Profit $2,102 $1,875 $1,556 Net Profit Margin 6.00% 5.10% 4.55%EPS $7.83 $4.16 $3.37 ROE 19.50% -23.80% -18.81%Revenue Growth 7.80% 8.00% 3.54%Net Income Growth 42.40% 20.50% -3.05%EPS Growth 51.20% 23.40% -2.88%

• Largest for profit hospital system in US (only the VA is larger)• Provide medical care (inpatient, outpatient, surgical, ambulatory, etc.) for customers

some of which are Cigna customers.• 167 hospitals, 113 free standing surgery centers (in US & UK) with over 42,000 beds• Located in 20 states, almost ½ of their locations in FL and TX• Large rural hospital population

Cigna Relationship• We contract with HCA to provide services to our customers. Need to contract

individually with each market which can be difficult• Working to collaborate with them in several markets (TN)• With ACA (and recent Supreme Court decision), clears the way for hospitals to expand

into new geographic areas and could lead to consolidation, mergers, etc.

Impact on Cigna's financial performance• Revenue & Profit

– For markets with large HCA presence, we have to have them in our network in order to sell/retain business. Negotiations can be tough when they have leverage over us in certain markets. Based on our contracts with HCA, increased patient utilization can place a downward pressure on profit margin.

Role in Healthcare Environment


• As a large HCP, they are able to leverage their size for significant discounts• Expect additional acquisitions to pressure currently negotiated rates

Summary


Offered by: Connecticut General Life Insurance Company or Cigna Health and Life Insurance Company.

“Cigna” and the “Tree of Life” logo are registered service marks, and “Together, all the way.” is a service mark, of Cigna Intellectual Property, Inc., licensed for use by Cigna Corporation and its operating subsidiaries. All products and services are provided by or through such operating subsidiaries, including Connecticut General Life Insurance Company and Cigna Health and Life Insurance Company, and not by Cigna Corporation. All models are used for illustrative purposes only.

000000 00/15 © 2015 Cigna. Some content provided under license.

hospital/healthcare provider analysis 7/9/15. hca owns and operates approximately 166 hospitals and...

Documents

cigna slide

unpublished property

personalized care

patient mix

patient outcomes

patient portal

outpatient services

laboratory services