Q3 2022 Snapshot: A Look Inside the Earnings Calls of Public Healthcare Operators

December 15, 2022

By: Madi Whyde, Savanna Ganyard, CFA, Jordan Tussy, and Madison Higgins

VMG Health reviewed the earnings calls of publicly traded healthcare operators that reported earnings for the third quarter that ended on September 30, 2022. By focusing on the major players in select subsectors defined below, we analyzed the frequency of certain keywords including inflation, COVID-19, interest rates, premium labor, and others. We used these keywords to identify which topics commanded the room this earnings season. Highlights from the calls are summarized in this article.

Companies Reviewed:

  • Acute Care Hospitals: Community Health Systems, Inc. (CYH), HCA Healthcare, Inc. (HCA), Tenet Healthcare Corporation (THC), Universal Health Services, Inc. (UHS)
  • Ambulatory Surgery Centers: Surgery Partners, Inc. (SRGY)
  • Diagnostic Imaging: RadNet, Inc. (RDNT)
  • Dialysis: DaVita Inc. (DVA)
  • Diversified Managed Care: Humana Inc. (HUM), UnitedHealth Group Incorporated (UNH)
  • Laboratory: Quest Diagnostics Incorporated (DGX)
  • Physician Services and Other: U.S. Physical Therapy, Inc. (USPH)
  • Post-Acute: Acadia Healthcare Company, Inc. (ACHC), Amedisys, Inc. (AMED), Chemed Corporation (CHE), Enhabit, Inc. (EHAB), Encompass Health Corporation (EHC), Select Medical Holdings Corporation (SEM)
  • Risk-Bearing Organizations: Agilon Health, Inc. (AGL), CareMax, Inc. (CMAX), Privia Health Group, Inc. (PRVA), The Oncology Institute, Inc. (TOI)

Key Takeaway: Volume

Volume: Although volume trends are unique to each industry sector nearly all operators remained focused on the impacts of COVID.

Poll: Did the earnings call mention COVID-19?

Acute Care Hospitals

On a same-facility basis, admission volumes declined as much as 5.0% from the comparable prior year quarter (Q3 2021) for acute care hospital operators. Despite the weakening of COVID-19, the decline in volumes was attributed to higher-than-average cancellation rates (THC), the migration of certain procedures to outpatient status (CYH and HCA), and capacity constraints (HCA). Inpatient volumes generally remained at or below pre-pandemic levels.

Ambulatory Surgery Centers

Ambulatory surgery center (ASC) operators reaped the benefits of the migration to the outpatient setting and reported positive volume trends when compared to Q3 2021. Surgical volumes were reported as consistent with 2019 pre-pandemic levels (THC), and one operator claimed the business did not experience any material direct impact related to COVID-19 during Q3 2022 (SGRY).


The post-acute sector reported mixed results in volume trends. One operator reported a year-over-year decline of 14.0% in hospice admissions, citing capacity constraints and reduced referrals from acute care hospitals (EHAB). However, another operator indicated that increases in admissions in the second half of the third quarter showed growth that they “haven’t experienced since the start of the pandemic” (CHE).

All Other

Volume trends among other industry players including dialysis providers, risk-bearing organizations, and physician services were also affected by COVID-19 in Q3 2022. Headwinds in dialysis volumes are expected to persist for the foreseeable future (DVA), and inpatient volumes for risk-bearing organizations remain below pre-pandemic levels (AGL). Notably, AGL also reported a rebound in physician office visits and outpatient volumes were in line with pre-pandemic levels.

Key Takeaway: Reimbursement

Reimbursement: Declining COVID-19 volumes mean less incremental government revenue for certain industry players who also now contend with an uncertain inflationary environment.

Poll: Did the earnings call mention inflation?

Acute Care Hospitals

Declining COVID-19 volumes resulted in lower acuity patients and reduced incremental government reimbursement. This softened the reimbursement per admission for the acute care hospital segment. Further exacerbated by inflation, these dynamics were evident in reported EBITDA margins which declined as much as 17.0% (CYH) over Q3 2021. In response, some acute care hospital operators are turning to commercial payor negotiations. Rate increases for the next year are anticipated to range from a minimum of 3.0% (THC) to upwards of 6.0% (CYH).


The post-acute sector did not release specific figures regarding contract rate hikes. However, the sector is optimistically looking for high single-digit rate increases (SEM) to provide relief in the current inflationary environment.

Key Takeaway: Labor

Labor: Unsurprisingly, management teams across the sector were faced with questions about labor trends and management techniques during their earnings calls. Contract labor remained pivotal for the operations of some, but premium labor appears to have softened during the quarter.

Poll: Did the earnings call mention premium or contract labor?

Acute Care Hospitals

The reliance on contract labor continued its downward trend in Q3 helping moderate expenses. HCA even indicated overall labor costs were stable due to targeted market adjustments. However, contract labor and premium pay remain at uncomfortably high levels for most acute care hospital operators. UHS revealed during their call it will be unlikely to reach pre-pandemic levels in the near future.


Staffing challenges persisted among the post-acute operators and directly impacted volume by as much as 60.0% (AMED). Increased indirect labor costs including orientation, training, and sign-on bonuses were the leading drivers of decreased EBITDA (AMED). Wage inflation, particularly for nursing positions, is expected to rise as much as 5.0% next year (SEM). However, several management teams are optimistic wages will stabilize to historical levels (SEM, EHC) in the near future.

All Other

Other industry players, including dialysis and physical therapy providers, also faced challenges with contract labor during the quarter. USPH reported labor costs were approximately 200 basis points higher than Q3 2021 levels, and DVA indicated such costs showed no improvement.

Key Takeaway: Go Forward Expectations and Guidance

Go Forward Expectations and Guidance: Considering the quarter’s performance, the companies we reviewed were divided relatively evenly in terms of revised FY 2022 revenue guidance, (i.e., raised, lowered, unchanged). In general, the quarter brought about a more pessimistic view of FY 2022 EBITDA, and the majority of public companies lowered their guidance for the year. Further, most stakeholders were left with no guidance for FY 2023.

Poll: Did the earnings call mention a recession? 

Acute Care Hospitals

FY 2022 revenue and EBITDA guidance among the acute care hospital operators was generally left unchanged except for THC which lowered EBITDA guidance. However, all companies that were reviewed declined to provide FY 2023 guidance during the call, and primarily cited economic uncertainty (HCA).


The post-acute sector appeared nearly unanimous in the outlook for the rest of 2022, and most operators lowered their revenue and EBITDA guidance. Unsurprisingly, no one offered FY 2023 guidance during the earnings calls.

Risk-Bearing Organizations

Interestingly, risk-bearing organizations mostly raised their revenue guidance for FY 2022 (AGL, CMAX, PRVA). However, EBITDA guidance was less predictable and was lowered (AGL, TOI), raised (PRVA), and unchanged (CMAX).

All Other

Most other healthcare operators followed similar patterns in terms of providing guidance for FY 2023. Of the companies we reviewed, only DVA revealed an outlook for the next year. The company anticipates revenue to be flat (driven by unfavorable volume trends) and margins to continue to feel the impact of labor market pressures.



Categories: Uncategorized

The Evolution and Future Outlook of PACE Programs following the COVID 19 Pandemic

August 18, 2021

Written by Tyler Perper, Kevin McDonough, CFA & Chloe White

The impacts of the Covid-19 pandemic have been felt throughout the healthcare industry and led to major shifts across all verticals. In particular, the care of the elderly and frail population has faced some of the most scrutiny over the past 18 months given the population’s elevated level of susceptibility to Covid-19 and the major safety protocols that come along with keeping them protected from transmission. Institutional, in-home, and community-based long-term services and support (“LTTS”) providers were forced to make major changes in procedure and delivery of care which has led to mixed results. However, one segment of the LTTS healthcare sector, Programs of All-Inclusive Care for the Elderly, or “PACE” organizations, has been incredibly successful in evolving its services under the tumultuous circumstances of the pandemic. The pandemic provided a unique opportunity for PACE organizations to rethink in-community and care-based services for participants. Throughout the pandemic, PACE organizations consistently demonstrated the ability to pivot quickly and effectively while maintaining a high level of safety for their enrollees and staff; all the while, keeping the cost of care under control.

PACE Programs are community-based programs serving over 55,000 elderly participants across 31 states and D.C. (1). Under PACE, enrollees are provided with an extensive list of care and services covered by Medicare and Medicaid as well as necessary care and services not covered while still able to reside in their own home (2). The general eligibility of PACE programs requires the enrollee to be above 55 years, reside in the PACE organization’s service area, and be certified as eligible for nursing home care by their state while able to live in a community setting (2).

PACE Programs, as opposed to other long-term care-facilities, allow enrollees to live in their own homes while providing transportation to the on-site PACE community center, with a central objective of reducing cost of care and admissions to both hospitals and residential care facilities (3). The platform allows for socialization and interaction but does not require nor offer 24/7 contact with other enrollees and staff. This degree of separation of enrollees largely affected the number of transmissions of Covid and Covid-related deaths in PACE Programs; approximately 1.39% of PACE enrollees tested positive and died from Covid-19 as of July 27, 2020 whereas 5.23% of the 1.3 million nursing home residents had died from Covid-19 as of August 13, 2020 (4). Despite enrollees’ frailty and eligibility for nursing homes, PACE participants, on average, had fewer hospitalizations, less time in the hospital, and a lower death rate than nursing home residents for both Covid and non-Covid related ailments (4). Non-communal living allowed PACE Programs the ability to change course rapidly without the concern of transmission from member to member or staff to member.

When the pandemic first began, PACE programs had to pivot, and could no longer view themselves as solely a physical location, but rather a moving entity comprised of enrollees, staff, and transportation vans. Problems centered around the conglomeration of people to receive care and to interact socially within the PACE centers (3). PACE programs had to redesign their care model almost overnight to accommodate regulations and to protect enrollees. All activities ceased, care providers were sent into homes, transportation vans became mobile health clinics, daily phone calls were made to enrollees, meals were delivered to homes, and activities became virtual (3). While every precaution taken was to protect enrollees, with the reduced interaction, loneliness for enrollees living alone became a pervasive issue. To combat this issue, some PACE programs partnered with telehealth companies. One PACE Program, Element Care, partnered with the telehealth company GrandPad, to obtain a proprietary tablet with a simple interface which allowed their enrollees to reach nurses, complete physical therapy, and participate in social activities (5). This program was one of many that were able to effectively reduce levels of loneliness and depression with the implementation of telehealth that offered enrollees an alternative way to connect with their peers during periods of isolation.

A huge concern surrounding care for the enrollees was the temporary closure of medical practices, due to the pandemic, to assist with the enrollees’ average six chronic illnesses (4). As a potential solution, Summit Eldercare, one of the largest PACE programs, opted to transform their in-house community center into an infirmary to care for Covid-positive members who were discharged from hospitals (4). It took about a month for Summit Eldercare to get the infirmary running, serving a total of 11 patients and providing around-the-clock care (4). Although the last patient was discharged in June of 2020, Summit Eldercare demonstrated PACE programs’ ability to utilize space effectively with the resources at their disposal.

PACE offers a much more dynamic and evolving system of aging that gained popularity and traction with the loosening of legal boundaries and allowance of for-profit entities entry into the market in 2015 (7). Prior to 2015, PACE programs were solely non-profit organizations that were plagued by static growth in participants and locations around the country despite the high demand for eldercare services (1). By 2030, the youngest Baby Boomers will be above the age of 65, contributing to the overall aging of the US population and creating a strain on the healthcare system (8). PACE has the opportunity to tap into this market and the potential to grow through scale, spread, and scope; increasing the number of people, number of organizations and communities served, and expanding the range of populations that PACE serves (9).

PACE Programs demonstrated the adaptive nature of the platform and their potential for growth, however, PACE still have substantial issues as the nation emerges from lockdown. Job growth in the leisure and hospitality industry has grown significantly over the past three months and Healthcare is one of the industries with the highest amount of job openings, in part due to 2/3rds of workers who lost their jobs either reconsidering their job choice or choosing to stay home (10). As PACE organizations plan for future expansion, these organizations will be forced to navigate a tight labor market in order to provide the full spectrum of care to new participants.

PACE programs adapted to the “new normal” that COVID presented and proved the benefits for quality in home and community-based care. Given the successes of PACE since the spring of 2020, policymakers around the country will continue to take notice and deliberate further expansion of the programs in their states. Although PACE has its fair share of headwinds, the innovative mindset of the operators as well as the program’s track record during the pandemic bodes well for the future of PACE in the ever-growing elderly care market space.


  1. https://www.pacenation.org/pace-programs/
  2. https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Downloads/pace111c01.pdf
  3. https://www.bettercareplaybook.org/_blog/2020/19/pace-response-covid-19-calls-policy-actions-increasing-access-and-affordability
  4. https://www.ipfcc.org/resources/Altarum_Program-to-Improve-Eldercare_Rapid-PACE-Responses_report.pdf
  5. https://www.hcinnovationgroup.com/population-health-management/complex-care/article/21229296/pace-programs-continue-to-innovate?fbclid=IwAR2RBdxOImuPFo5T-b8HKGnw0EFjkFORxmYgwNPkFp2F-CDDMZI2XP-I9Xk
  6. https://nam.edu/reimagining-nursing-homes-in-the-wake-of-covid-19/
  7. https://www.ncbi.nlm.nih.gov/pmc/articles/PMC2690172/
  8. https://www.census.gov/library/stories/2019/12/by-2030-all-baby-boomers-will-be-age-65-or-older.html
  9. https://www.commonwealthfund.org/publications/issue-briefs/2020/oct/expanding-pace-model-high-need-high-cost
  10. https://www.govtech.com/education/higher-ed/states-expand-apprenticeship-programs-as-worker-shortages-grow
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