11/03/2023
EM Workforce Newsletter: Investors Shocked by Hospital-based Physician Losses After No Surprises Act.
Also: EM residency applications up, TMB on CPOM, HCA gutting hearts & souls, Abridge abridges documentation time, & pharmacists' wildcat strikes.
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After years of reading articles about acute care physician companies’ “exorbitant” revenues (see KFF Bill of the Month archives), many investors have been shocked by publicly traded hospital companies’ announcements that in-housed physician practices lost massive amounts of money in Q3 2023.
While Envision declared bankruptcy this year, Envision practices at HCA facilities were internalized by the health system. That ownership change made Envision’s former practices’ financial performance visible to the public.
On its Q3 earnings call, HCA revealed that the former HCA-Envision joint venture, now named Valesco, lost $100 million in the quarter (26.3%). Bill Rutherford, HCA’s Chief Financial Officer, explained: “There's no doubt the issue for us in the quarter was the Valesco operations. We’re not clearing as much revenue as we anticipated.”
In the earnings call Q&A, Justin Lake, a healthcare analyst with Wolfe Research, was so bewildered at the degree of HCA’s physician practice losses that he had difficulty formulating his question. He asked, “I'm going to pile on with this physician stuff. So just, I've never seen a business kind of be off this far from, like, you guys are obviously very, very good at what you do. I know this is a new business, but to be $50 million of revenue on a $250 million baseline, 20%. So I just the like, can you triple click on that for me and just say like, what did you think was going on versus what is? And then the, for – when you gave your headwinds, tailwinds for next year, the only headwind you talked about was that payment, which makes sense. But you've given some numbers around the subsidy costs right, the physician costs that run through other operations. And they do seem like they've been a pretty big drag on margins.”
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To read the rest of this week's newsletter, head to
Also: EM residency applications up, TMB on CPOM, HCA gutting hearts & souls, Abridge abridges documentation time, & pharmacists' wildcat strikes.
