uploads/2016/02/admissions-consolidated21.png

What Key Factors Drive Revenue for LifePoint?

By

Updated

What drives LifePoint’s revenue?

Major revenue drivers for LifePoint Health (LPNT) include:

  • Equivalent admissions
  • Medicare case mix index
  • Average length of stay
  • Inpatient and outpatient surgeries
  • Emergency room visits
  • Outpatient factor

To learn more about the company’s organic growth strategy, please refer to Organic growth strategy at LifePoint Hospitals.

Article continues below advertisement

Admissions on a consolidated basis

LifePoint’s consolidated admissions fell 1.7% annually to 59,000 in 4Q15 from 60,000 in 4Q14. Its equivalent admissions on a consolidated basis rose to 157,000, an annual jump of 2.4%.

The company’s net revenue per equivalent admission rose by 5.9% in 4Q15. Case mix improvement and higher reimbursements from commercial payers drove revenue.

LifePoint defines admissions as the total number of patients admitted to the hospital, which is a general measure of inpatient volume. Equivalent admissions group inpatient and outpatient volumes together.

LifePoint has grown organically as well as inorganically. It presents separate same-facility admissions data and consolidated data. The consolidated data includes same-facility performance as well as additions from recent acquisitions. Similarly, it also includes the results of hospitals that have been disposed of.

Article continues below advertisement

Inpatient and outpatient surgeries

During 4Q15, there was a fall of 0.2% in total same-hospital surgeries.

Same-hospital total surgeries include inpatient and outpatient surgeries. On a same-facility basis, inpatient surgeries fell by 1%, whereas outpatient surgeries rose by 0.1% during the quarter.

Outpatient surgeries on a consolidated basis rose to 63,000 during 4Q15, reflecting a 5.4% annual jump, whereas inpatient surgeries rose by 3.9% to 17,000.

The average length of stay remained unchanged at 4.9 days in 2015. However, on a same-facility basis in 2015, the length of stay increased by 2.1%.

LifePoint’s peers include HCA Holdings (HCA), Universal Health Services (UHS), and Tenet Healthcare (THC).

LifePoint’s share price is quite susceptible to economic, industry, or company-based events. To diversify the risk of directly investing in the equity, investors may want to look into options such as the iShares S&P Mid-Cap 400 Value ETF (IJJ). The fund has 0.43% of its total holdings in LifePoint’s stock.

Advertisement

More From Market Realist