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HCA Holdings’ revenue streams

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Segmental revenue breakup

HCA Holdings’ net revenues increased by 3.5% from $33.0 billion in 2012 to $34.1 billion in 2013. This increase was due to a combined impact of increase in revenue per admission, as well as the total number of admissions in 2013 as compared to 2012.

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Operating groups

In the US, HCA has two geographically organized operating groups, namely the National and American Groups. The National Group includes 82 hospitals located mainly in California, Florida, Southern Georgia, Utah, and Virginia. The American group includes 77 hospitals located in Colorado, Northern Georgia, Kansas, Louisiana, Mississippi, Missouri, Oklahoma, Tennessee, and Texas. Corporate and other groups include the six hospitals operated by the company in England.

The graph shows that the contribution of the National Group to the total revenues declined from 50% in 2011 to 47% in 2013, while that of the American Group increased from 46% to 48% in the same period. The slow growth in the National Group segment is attributed mainly to the weak economic conditions in Florida.

Utilization trends

HCA Holdings’ utilization figures are one of the best in the healthcare industry, as represented by the Health Care Select Sector SPDR ETF (XLV). Despite the declining trend in the total inpatient admissions exhibited by major competitors like Community Health Systems (CYH) and LifePoint Hospitals (LPNT), HCA Holdings has maintained a growth rate of 0.2% in total inpatient admissions from 2012 to 2013.

Unlike the case of Tenet Healthcare (THC), where the total admissions increased due to a major acquisition, HCA Holdings’ growth is mainly attributed to the improved quality of services and the company’s market leader position.

The proportion of outpatient revenues in the total revenues has shifted gradually from 37% in 2011 to 38% in 2013, underscoring the growing importance of outpatient services in the hospital’s portfolio.

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