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HCA Holdings outpatient services see revenue growth

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Revenue breakup by segment

HCA Holdings (HCA) went public in March 2011. Since then, the company has consistently registered healthy revenues. Company executives claim that improving economic conditions and a better labor market in the hospital operator’s key markets are mainly responsible for the solid revenues it recorded in the third quarter of 2014.

HCA Holdings, or HCA, classifies its revenues according to two geographical segments:

  • National Group – revenues up by 11.6%, from $3.9 billion in 3Q13 to $4.38 billion in 3Q14
  • American Group – revenues up by 5.8%, from $4.08 billion in 3Q13 to $4.32 billion in 3Q14

The difference in performance can be attributed to higher aggregate employment in the areas included in the National Group.

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Outpatient services

The hospital industry is part of the healthcare industry. As such, it is represented by the Health Care Select Sector SPDR Fund (XLV).

Hospitals are witnessing a gradual shift from inpatient  to outpatient services. As there is more demand for less expensive and more efficient treatments, major hospital operators such as HCA Holdings, Community Health Systems (CYH), Universal Health Services (UHS), and Tenet Healthcare (THC) are acquiring outpatient clinics and ambulatory surgery centers.

HCA earned 38% of its total revenue from outpatient services in 3Q14. The company also announced the acquisition of CareNow, a Dallas-Fort Worth company with 11 hospitals and more than 50 ambulatory sites. As part of its outpatient strategy, HCA concentrates on creating networks of emergency centers and urgent care centers. An added benefit for the company is that these centers also serve to increase referrals for inpatient services.

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