The Tennessee Health Services and Development Agency last week approved freestanding emergency department plans for Sumner Regional Medical Center and TriStar Summit Medical Center.
HSDA counsel Jim Christoffersen confirmed that LifePoint Health hospital Sumner Regional will move forward with its five-room project, which is expected to cost $7 million. The TriStar Summit standalone ER in Mt. Juliet will consist of eight treatment rooms and has an estimated cost of $11.1 million.
Several other Middle Tennessee hospital systems have filed certificate-of-need applications for freestanding ERs this year. TriStar Southern Hills and Saint Thomas Midtown were both denied in March for projects planned in Brentwood, while Community Health Systems' subsidiary Gateway Medical Center was approved last month for an ER in Clarksville.
Hospital stocks already had fallen a long way from their spring peaks. On Thursday, they took another tumble after executives with insurance giant UnitedHealth Group said they may not return to the insurance exchange market in 2017. That's a sharp turnabout from last month, when the company said it would add 11 states to its exchange lineup. But now execs say they expect to take a $500 million bath on their insurance exchange business in 2016, and they have scaled back their marketing of those products.
“We cannot sustain these losses,” Chief Executive Officer Stephen Hemsley told analysts on a conference call. “We can’t really subsidize a marketplace that doesn’t appear at the moment to be sustaining itself.”
The news delivered an early-morning blow to the shares of Middle Tennessee's hospital companies and there was no recovery during the day. Heading into the last few minutes of trading, HCA Holdings was down 6.1 percent while Community Health Systems was off 8.5 percent and LifePoint Health was giving up 5.6 percent. Shares of surgery center and physician services company AmSurg (Ticker: AMSG) also were down more than 5 percent.
Combined, those drops wiped out $2.4 billion of the market value of the four local companies — $1.7 billion of that number in HCA alone. Industry peers Tenet Healthcare and Universal Health Services also didn't avoid the red ink.
HCA Holdings has donated $1 million to Tennessee State University in support of health science scholarships. The funds will be donated to the Nashville university in $250,000 increments over four years, and will support students in the 11-discipline College of Health Sciences.
"It is not unusual for us to announce gifts to city and local institutions, and this year we are pleased to announce a four-year commitment to Tennessee State University of $250,000 annually totaling $1 million in scholarships to benefit students in the College of Health Sciences,” Milton Johnson, HCA Chairman and CEO, said in a release. “We are proud to support our neighbor, TSU, and we have many graduates who have done an outstanding job for us.”
Paula Torch at Avondale Partners has updated her models for HCA Holdings after the hospital giant formally reported its third-quarter numbers.
Torch is still “confident in management's ability to manage through HR issues which pressured 3Q” and likes that volumes are holding up.
Still, the cost of drugs and people could put pressure on all hospital operators in 2016 and beyond and has Torch “baking in an increased level of conservatism into our numbers.” She has adjusted her 2016 estimates and trimmed her price target to $85 from $103. But she’s reiterating her ‘market outperform’ rating and says investors should look at weakness as a buying opportunity.
At about noon Wednesday, HCA (Ticker: HCA) was changing hands at $68.88, flat on the day.