The country’s three largest for-profit health systems – HCA Healthcare, Tenet Healthcare and Community Health Systems (CHS) – all posted their second quarter earnings recently. Whilst HCA and Tenet reported net incomes for the quarter, CHS posted a net loss. Nevertheless, all three health systems found themselves in a significantly healthier financial position in Q2 2023 than they were in Q2 of last year, the improvement largely attributed to declining contract labor expenses.
As of 2020, these three public health systems accounted for about 8% of hospital beds in the U.S.
HCA, the country’s largest for-profit hospital chain, reported a net income of $1.19 billion for Q2 2023, which is up 3.3% from the $1.155 billion net income it posted in last year’s Q2. The health system’s Q2 2023 revenues totalled $15.86 billion, compared to $14.8 billion in Q2 2022.
Tenet, the country’s second-largest for-profit health system, posted a net income of $123 million in Q2 2023, a significant increase from the $38 million net income the health system reported in Q2 2022.
Unlike HCA and Tenet, CHS reported a net loss in Q2 2023. However, its losses have been much less severe this year compared to last year. The hospital chain posted a net loss of $38 million, down from a net loss of $326 million during last year’s Q2.
All three hospital chains revealed that their reduced utilization of contract labor significantly contributed to their improved earnings. Notably, HCA reported that its contract labor expenses went down 20%. Similarly, Tenet revealed a reduction in contract labor costs down to just 4.3% of the health system’s total expenses for salaries and benefits. CHS cut its contract labor expenses by 50% in Q2.
A report released last week substantiated this trend, showing that the proportion of hours worked by contract nurses dropped from 12.4% in March to 8.3% in June.