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Dive Brief:
- A rise in uninsured patients along with Americans’ increasing reluctance to undergo elective surgeries due to financial concerns is hitting for-profit hospital operator Community Health Systems’ bottom line.
- On Thursday, executives said CHS’ finances in the second quarter fell below the company’s internal expectations, as more uninsured patients sought care from its facilities and surgery volumes declined. CHS lowered its revenue and earnings expectations for 2026 as a result.
- Executives speculated that the rise in uninsured patients stemmed mainly from patients dropping coverage on the Affordable Care Act exchanges after premiums spiked this year. The hospital operator now expects to lose $50 million to $75 million this year in adjusted earnings before interest, tax, depreciation and amoritization from the ACA losses — up from its previous projected hit of $20 million to $30 million.
Dive Insight:
The expiration of ACA tax credits at the end of last year has caused a financial reckoning for large U.S. hospital operators, as executives scrambled to project the impact to their bottom lines for Wall Street investors.
Financial results for hospital operators in the second quarter have been highly anticipated, as the earnings can provide a snapshot into how membership losses in the ACA exchanges are impacting providers and the broader economy.
That anticipation was further heightened last week when HCA Healthcare, the largest hospital operator in the country, said in a rare preview of its earnings that it expected $1 billion or more in lost income due to a rise in uninsured patients, many of which lost coverage after dropping their ACA plans. Stocks in major hospital operators have been weak or falling since the announcement.
Now, CHS has become the second large hospital provider to say a rise in uninsured patients, primarily stemming from patients losing ACA coverage, are causing higher-than-expected financial losses.
After a lengthy congressional debate, Republicans declined to extend enhanced premium tax credits in ACA plans last year. Premiums spiked as a result this year, forcing some Americans to forgo their plans due to costs. Many ended up in plans with higher out-of-pocket expenses — or went uninsured altogether.
Executives at CHS, one of the largest hospital operators in the U.S. that owns or leases 60 hospitals and more than 800 care sites across 12 states, said the amount of uncompensated care patients has risen by roughly 20% compared with 2025, and accelerated more rapidly in the second quarter compared with the first.
Uninsured patients who have dropped their ACA plans seem to be the primary driver of that increase, executives said.
“I think the increase in uninsured is primarily coming from the exchange business,” CEO Kevin Hammons said on a Thursday call with investors.
Those uninsured patients are dragging on CHS’ earnings, executives said. For example, while same-store adjusted admissions increased 2.9% year over year, over half of that growth was driven by uninsured patients. Beacuse uninsured patients often equal minimal, or no, revenue for hospitals, any admissions gains in the second quarter were largely offset.
Surgical volumes also fell behind in the second quarter, as more patients decided not to undergo elective procedures due to economic reasons. Orthopedic and cardiac surgeries saw the most notable declines, executives said. Same-store surgeries were largely flat, while inpatient surgeries declined by 3.8%.
The softer volumes and rise in uninsured patients prompted CHS to downgrade its revenue and earnings expectations for this year. CHS now expects $11.4 billion to $11.6 billion in operating revenues, down from $11.6 billion to $12 billion it expected at the beginning of the year.
EBITDA is expected to fall between $1.3 billion to $1.375 billion, down from $1.34 billion to $1.49 billion previously expected.
“We believe it is prudent to be more cautious about the second half of the year, and therefore adjusted our full year outlook accordingly,” Hammons said.