Tenet Healthcare Corp. and HCA Healthcare saw profits fall in the third quarter, as higher labor costs and inflation continued to weigh on the industry.
Tenet, which released figures on Thursday, reported net income of $131 million for the third quarter, down 71% year-over-year. Revenue fell nearly 2% to $4.8 billion.
Operating costs at the Dallas-based for-profit system rose 9.7% to $4.31 billion — including wages, salaries and benefits up 1%, but supply costs down 1. ,2%. Contract labor costs remained high, accounting for 7.4% of total payroll costs, compared with 6.2% in the second quarter.
Tenet’s board has also authorized a $1 billion stock buyback program that runs through the end of 2024.
Tenet continues to expand the reach of its ambulatory operations through its subsidiary United Surgery Partners International, capitalizing on an industry-wide shift away from traditional acute care facilities. In the past quarter, it added 32 ambulatory surgery centers across 10 states, mostly through acquisitions. Another 15 centers are under construction.
In a Friday call with analysts, CEO Saum Sutaria said Tenet expects lower profits from its ambulance segment in 2022, partly due to a spike in profits. related to COVID in July and the effects of Hurricane Ian. There has been no change in patient demand related to a potential recession, he said.
Tenet plans to invest $250 million per year in mergers and acquisitions or construction for its ambulance segment, he said.
“We have faced a number of challenges affecting the segment, but we also have periods where the performance hit our high expectations in early 2022,” said Sutaria. “These centers are doing well. Their earnings are in line with a range of our expectations and they are continuing to grow.”
HCA Healthcare, a for-profit system based in Nashville, Tennessee, on Friday reported net income of $1.13 billion for the third quarter, a 50% drop from the 2021 period. Revenue fell. 2%, to 14.97 billion USD.
Costs at HCA amounted to $13.27 billion, compared with $12.12 billion in the same period a year ago. Expenses related to salary, wages and benefits decreased by 2.75% while material costs decreased by 5.8%. HCA reported an increase in the “other expenses” category, due in part to supplier taxes, professional fees, and utility costs.
Chief Financial Officer Bill Rutherford estimated $35 million in additional costs and loss of revenue in the third quarter due to the impact of Hurricane Ian on HCA facilities.
CEO Sam Hazen said the system is still experiencing some capacity issues as enrollments at similar institutions fell 1.5% in the quarter.
