HCA (Hospital Corporation of America) operates more than 160 acute care, psychiatric, and rehabilitation hospitals in the US and in London, England. It also runs more than 112 ambulatory surgery centers, as well as cancer treatment and outpatient rehab centers that form health care networks in many of the communities it serves. In total, its hospitals are home to more than 40,500 beds. HCA's facilities are located in 20 states; roughly half its hospitals are in Florida and Texas. HCA International operates hospitals and clinics in the UK. In 2011, HCA Holdings, Inc. went public through a $3.8 billion initial public offering.
HCA used its IPO proceeds to repay certain portions of its debt, as well as for general corporate purposes. Though it runs a profitable business, the highly leveraged firm has a steep debt total of some $27 billion.
HCA is the largest for-profit hospital operator in the country, providing about 5% of all US hospital services. Most of its hospitals are in high-growth urban and suburban markets. The vast majority of its operations are general acute care hospitals that offer a full range of inpatient services in medical specialties such as internal medicine, general surgery, cardiology, oncology, neurosurgery, orthopedics and obstetrics. HCA ranks first or second in terms of inpatient market share in many of its key markets.
The hospital group also operates a handful of psychiatric facilities and a rehabilitation hospital, and counts on a diversified service line and revenue base to help spread its financial risk around. Diversification also helps limit the company's exposure to increased competition.
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Managed care contracts with insurance firms account for more than half of the hospital operator's patient income. Medicare and Medicaid are HCA's second biggest payers, accounting for more than 40 percent of its revenues in 2011.
HCA's general strategy for growth includes increased services and diversified acquisitions. The company expands in its selected markets by acquiring hospitals and by retaining patients at its existing facilities with a broad range of services. It is particularly interested in bolstering its outpatient offerings, as well as specialty services in high-margin fields such as orthopedics and cardiology.
In addition, it plans to move its infrastructure forward with the expansion of electronic health record keeping (for which it receives governmental incentive payments) and transcription services, and it is implementing a number of other safety and quality initiatives to reduce costs of care.
HCA takes advantage of its national scale (and its position as the leading health care provider in many communities) to negotiate advantageous purchasing contracts with its suppliers. It also seeks to increase profits by entering into favorable reimbursement terms with managed care companies.
Mergers & Acquisitions
In mid-2011 the company moved forward with its growth initiatives by acquiring full ownership of the HCA-HealthONE entity, a hospital system in Denver. HCA and Colorado Health Foundation (CHF) had operated the system as a joint venture since 1995. HCA purchased CHF's 40 percent stake in HCA-HealthONE for $1.45 billion to expand its services in the region.
In early 2012 the company expanded again through the purchase of the Galichia Heart Hospital in Wichita, Kansas, for an undisclosed price. HCA also occasionally divests facilities that it deems noncore to its strategy.
The private investor group that put HCA on the public market retains a 60 percent stake following the company's 2011 IPO. The group, collectively known as Hercules Holding II, includes co-founder Thomas Frist Jr., as well as Bain Capital, Kohlberg Kravis Roberts, Merrill Lynch's private equity arm, and other members of HCA management. – less