Presentation is loading. Please wait.

Presentation is loading. Please wait.

Jack O. Bovender, Jr.Chairman and CEO Vic CampbellSenior Vice President Mark KimbroughVP, Investor Relations JP Morgan Healthcare Conference January 2004.

Similar presentations


Presentation on theme: "Jack O. Bovender, Jr.Chairman and CEO Vic CampbellSenior Vice President Mark KimbroughVP, Investor Relations JP Morgan Healthcare Conference January 2004."— Presentation transcript:

1 Jack O. Bovender, Jr.Chairman and CEO Vic CampbellSenior Vice President Mark KimbroughVP, Investor Relations JP Morgan Healthcare Conference January 2004

2 This press release contains forward-looking statements based on current management expectations. Those forward-looking statements include all statements regarding our estimated results of operations in future periods and all statements other than those made solely with respect to historical fact. Numerous risks, uncertainties and other factors may cause actual results to differ materially from those expressed in any forward-looking statements. These factors include, but are not limited to (i) the highly competitive nature of the health care business, (ii) the efforts of insurers, health care providers and others to contain health care costs, (iii) possible changes in the Medicare and Medicaid programs that may impact reimbursements to health care providers and insurers, (iv) the ability to achieve operating and financial targets and achieve expected levels of patient volumes and control the costs of providing services, (v) the possible enactment of Federal or state health care reform, (vi) the ability to attract and retain qualified management and personnel, including affiliated physicians, nurses and medical support personnel, (vii) potential liabilities and other claims that may be asserted against the Company, (viii) fluctuations in the market value of the Company ’ s common stock, (ix) the Company ’ s ability to complete the share repurchase program, (x) changes in accounting practices, (xi) changes in general economic conditions, (xii) future divestitures which may result in additional charges, (xiii) changes in revenue mix and the ability to enter into and renew managed care provider arrangements on acceptable terms, (xiv) the availability and terms of capital to fund the expansion of the Company ’ s business, (xv) changes in business strategy or development plans, (xvi) delays in receiving payments for services provided, (xvii) increases in the amount and risk of collectibility of uninsured accounts and deductibles and co-pay amounts for insured accounts, (xviii) the outcome of pending and any future tax audits and litigation associated with the Company ’ s tax positions, (xix) the outcome of the Company ’ s continuing efforts to monitor, maintain and comply with appropriate laws, regulations, policies and procedures and the Company ’ s corporate integrity agreement with the government, (xx) changes in Federal, state or local regulations affecting the health care industry, (xxi) the impact of charity and self-pay discounting care policy changes, (xxii) the ability to successfully integrate the operations of Health Midwest, (xxiii) the ability to develop and implement the financial enterprise resource planning information system within the expected time and cost projections and, upon implementation, to realize the expected benefits and efficiencies, (xxiv) the ability to enter into definitive written agreements with regard to the understanding with attorneys representing the class in the class action litigation and insurance carriers, and obtain court approval thereof; and (xxv) other risk factors detailed from time to time in the Company ’ s filings with the SEC. Many of the factors that will determine the Company ’ s future results are beyond the ability of the Company to control or predict. In light of the significant uncertainties inherent in the forward-looking statements contained herein, readers should not place undue reliance on forward-looking statements, which reflect management ’ s views only as of the date hereof. The Company undertakes no obligation to revise or update any forward-looking statements, or to make any other forward-looking statements, whether as a result of new information, future events or otherwise. All references to “ Company ” and “ HCA ” as used throughout this document refer to HCA Inc. and its affiliates. 2 HCA

3 3 HCA is located in 16 of 20 Fastest Growing Large US Cities Switzerland U.K. % % % % % % Compared to the National Average of 4.5% Las Vegas +22% Las Vegas +22% Southern California +9% Southern California +9% Denver +9% Denver +9% Dade +8% Dade +8% Nashville +8% Nashville +8% Panhandle +10% Panhandle +10% Tampa Bay +8% Tampa Bay +8% Dallas/Ft. Worth +12% Dallas/Ft. Worth +12% Austin +18% Austin +18% Richmond +8% Richmond +8% Palm Beach +11% Palm Beach +11% Houston +10% Houston +10% Kansas City +5% Kansas City +5% Percent Growth in Market Population 2000-2005 HCA  Generally 25-40% Market Share  40% of facilities in Texas & Florida

4 4 New Market: Midwest Division  Includes 12 hospitals (1 management contract) & 2 ASC’s  Represents 33% of the total acute care providers in the Kansas City metro area and is the area’s largest health care system  CON in Missouri, No CON in Kansas  $450M capital commitment within 5 years HCA Midwest Division Hospitals HCA

5 5 HCA Annual Environmental Review Key Findings and Actions HCA HCA’s core business strategy is sound. The Company’s focus will continue to be on market-leading positions in large, fast-growing urban communities. To compete more effectively in the outpatient area, the Company has established a Corporate operational unit focused on outpatient services. HCA anticipates making strategic acquisitions in outpatient services. The Company intends to reduce capital expenditures from approximately $2 billion in 2003, to approximately $1.8 billion in 2004 and to approximately $1.6 billion annually thereafter, excluding acquisitions. HCA anticipates lowering its target ratio of debt-to-total capitalization from 55 percent to the low 50s or high 40s by mid-to-late 2005.

6 6 HCA Annual Environmental Review Key Findings and Actions HCA The Company’s current $1.5 billion share repurchase program is expected to be completed in a judicious manner, as dictated by market conditions. HCA’s Senior Management and Board of Directors are evaluating a change to the Company’s existing dividend policy and expected to announce any changes in the Company’s existing dividend policy in the first quarter of 2004. The Company has revised its long-term earnings per share growth target after 2004 from mid-teens to low-double-digits.

7 7 Socio-Demographics—Age Wave Driving Healthcare Utilization 1.58% CAGR 2003-2012 1.62% 3-Year CAGR Acute Care Utilization Index (2003=100) Baby Boomer Impact Accelerates 1.7% 1.6% 1.5% 1.6% 1.5% 1.6% 1.5% 121 119 117 115 113 112 110 108 106 105 103 102 100 98 97 96 1.4% 1.56% 3-Year CAGR 1.59% 3-Year CAGR 1.58% 3-Year CAGR HCA

8 Positive Influence Hospital Volume Outlook: 3-5 Years 8 HCA Negative Influence Population Growth Aging Technology Economy Unemployment Higher Co-Pays and Deductibles

9 9 Unemployment Trends National Average vs. HCA Key Markets National Average Range: 4.6%-6.6% 2000 2001 2002 Sept YTD 2003 Source: US Department of Labor HCA

10 10 HCA Admissions Trends 2001 to 3rd Quarter 2003 – Same Facility Adjusted for closed SNF/OB units Adjusted for closed SNF/OB units HCA

11 11 HCA Market Avg. Medicare admissions to HCA facilities increased by 15.4%, more than twice the rate of growth in the HCA markets (6.7% on average).Medicare admissions to HCA facilities increased by 15.4%, more than twice the rate of growth in the HCA markets (6.7% on average). HCA increased its share of Medicare admissions in 14 of 15 markets by 114 bps, on average, and increased its surgical market share by an average of 120 bps.HCA increased its share of Medicare admissions in 14 of 15 markets by 114 bps, on average, and increased its surgical market share by an average of 120 bps. Source: Data Advantage Corp. and UBS Warburg HCA Growing Medicare Market Share Growth in Medicare Admissions, 1998 - 2001 HCA 15.4%

12 12 Net Revenue per Adjusted Admission 2000 to 3 rd Quarter 2003 – Same Facility HCA NRAA reflects all payors, pricing, intensity and mix

13  70% of 2004 contracts completed at average rate increase of approximately 7% Managed Care Contracting 13 HCA  Pricing and terms consistent with 2003  Recent contracts completed HumanaGA; TN; San Antonio, TX; IN, KY CIGNARichmond and Dallas AetnaWest Florida, Dallas, Houston BCBSFL  45% of our contracts are now multi-year agreements

14  Medicare Bill approved on Nov 25, 2003 provides for full market basket increases for hospital payments in 2004 to 2006 Medicare Environment 14 HCA  Negative impact of outlier rule changes effective Oct. 1, 2003 – Sept. 30, 2004 currently estimated to be $12 million per month for HCA  Eighteen-month moratorium on new physician- owned “niche” hospitals pending Med Pac study of “whole hospital” loophole related to physician self referrals

15  SWB down 40 bps (adjusted for HMW acquisition) to 39.6% of NR through September 2003 Focused Cost Management 15 HCA  Contract labor cost per adjusted day is down 27% from Q1 2003 with nursing contract labor decreasing approximately 30%  Supply costs remain unchanged YTD in the face of increasing technology and drug costs as many “supply chain” initiatives gain momentum

16  Provision for Doubtful Accounts increased to approximately 10% of NR YTD Increasing Self-Pay Revenues Put Pressure on Bad Debts 16 HCA  Increasing self-pay receivables combined with a deterioration in collectibility of this A/R contributed to the need to increase the provision for doubtful accounts  Soft economy/unemployment is a major driver of the escalation of uninsured patients  Bad debt expense in 2004 should moderate with the implementation of the Company’s Charity Care Policy

17 HCA Provision for Doubtful Accounts Driven by Increasing Self-Pay A/R and Deteriorating Collectibility of Self-Pay A/R 17 HCA Approximately $2.7 billion of A/R is self-pay HCA has $2.4 billion reserved, or 87% of self-pay A/R, as uncollectible @ Sept. 30, 2003 Self-Pay % of Total A/R Collectibility of Self-Pay A/R 12% 46% 17% 38%

18 18 Routine Capital Facility Expansion Projects New & Replacement Facilities Infrastructure Develop., IT&S, & Pat. Safety Billions Shared Services $1.2 $1.4 $1.7$2.0 $1.8 Kansas City Does not include HMW acquisition but includes capital obligations HCA Capital Expenditures HCA

19 19 Sky Ridge Medical Center Denver, Colorado ($150M) 104 beds Opened: August 2003 HCA

20 20 Capital Regional Medical Center Tallahassee, FL ($100M) 200 beds Opened: August 2003 HCA

21 21 Stonecrest Medical Center Smyrna, TN ($96M) 75 beds Opened: December 2004 HCA

22 22 HCA is Investing Significantly in Programs for Patient Safety and Improved Patient Outcomes HCA   E MAR: Medication Error Prevention  E POM: Physician Order Entry  100% Participation in CMS Quality Reporting Initiative  Member of NQF and Leapfrog  Cardiovascular, OB and Emergency Department Initiatives

23 23 A prudent financial strategy that provides for a strong balance sheet and return of cash to shareholders through share repurchase and/or dividends Excellent Investment Opportunities Strong Cash Flows Excellent Long-Term Earnings Growth Outlook Great Assets In Summary We Have…. HCA


Download ppt "Jack O. Bovender, Jr.Chairman and CEO Vic CampbellSenior Vice President Mark KimbroughVP, Investor Relations JP Morgan Healthcare Conference January 2004."

Similar presentations


Ads by Google