Last Tuesday, HCA, the largest investor-owned hospital system, released their Q4 2025 and year-end earnings and they’re impressive. The 190-hospital system reported:
- Net income of $6.8 billion in 2025, a 17.8% increase year over year.
- Revenue of $75.6 billion, a 7.1% increase year over year.
- On a same facility basis, growth in revenue of 6.6%, equivalent admissions of 2.4% and net revenue per equivalent admission of 4.1% versus prior year.
- For 2026, projected a net income between $6.5 billion and $7 billion and adjusted EBITDA between $15.6 and $16.5 billion on revenue between $76.5 billion and $80 billion.
CFO Mike Marks told the 16 analysts on the investor call “Consolidated adjusted EBITDA increased 12.1% over prior year, and we delivered a 90-basis point improvement in adjusted EBITDA margin. Cash flow from operations was $2.4 billion in the (4th) quarter and $12.6 billion for the year. This represents a 20% increase in operating cash flow in 2025 over full year 2024.”
And CEO Sam Hazen added “Let me add to just the whole resiliency agenda. This is not an episodic event for us. It just happens to be a maturation of what in my estimation is cultural within HCA, and that is being cost effective in finding ways to leverage scale, utilize best practices. Now we have tools… that are in front of us as opportunities to create even more consistency, efficiencies and transparency in the company’s overall cost. And that’s why the program is lining up in a well-timed manner with some of the enhanced premium tax credit challenges.
But we see this program continuing to mature. And as we get more capable at using these tools, it’s going to help us find even more opportunities. But this is not a onetime event. It’s a cultural dynamic in our company around being cost effective, being high quality and finding ways to improve from a process standpoint and a leverage standpoint with our overall scale.”
Shares of HCA closed at $488.27 last week, down from its peak at $527.55 (January27). Per MarketWatch, “shares of HCA Healthcare Inc rose $1.19% to $488.27 Friday on what proved to be an around grim trading session for the stock market, with the S&P Index falling 0.43% to 6939.03 and Dow (DJIA) falling 0.36% to 48,892.47. The stock demonstrated a mixed performance when compared to some of its competitors Friday, as Community Health Systems (CYH) rose 1.26% to $3.21 and Tenet (THC) fell 0.11% to $189.28.”
Hospital stock market analysts are keen to gauge how companies like these are navigating choppy waters for healthcare. It’s understandable: Healthcare is one of the 11 sectors that comprises the overall S&P 500 and is 9.6% of its weighting. Historically, the healthcare index had beaten the S&P (30-year average 9% vs. 8% overall) but in recent years, it has lagged largely because regulatory policy changes and healthcare budget volatility dampened investor confidence.
Investors are increasingly hedging their bets in healthcare services reasoning even market bell-weathers like HCA face headwinds. And that sentiment has profound impact on operators in not-for-profit health sectors like community and rural hospitals, nursing and home care and ancillary services like EMS, hospice care and others that see their credit-worthiness slipping and costs for debt capital increasing.
My take
HCA is not an exception. It is culturally geared to the business of running hospitals and amassing scale in its markets vis a vis outpatient services and physician relationships. It follows a playbook geared to earnings per share and strategic deployment of capital to optimize its ROC, and it rewards its leaders accordingly. These are not unique to HCA.
And, like other systems, HCA is a lightning rod for critics. Studies have shown for-profit hospitals lean on staffing, aggressive on procurement, concerning to physicians and increasingly problematic to private insurers. Those same studies have shown quality of care to be comparable and charity care to be at or above same-market competitors. But this discipline also enables a higher price to cost ratio, a better payer mix and pruning of clinical services where margins are thin. Again, leverage in payer contracts and high pricing are not unique to the HCA playbook. Some not-for-profit systems have done the same or better.
What’s unique for each system like HCA are 1-the markets in which they enjoy leverage by virtue of scale and 2-the aggressiveness whereby they use their leverage. Ownership status—not for profit vs. investor-owned—matters in some markets and organizations more than others. But market dominance by any system, and how it’s leveraged, is a differentiator.
Case in point: In Asheville NC, HCA’s Mission Health dominates. HCA paid $1.5 billion for the legacy Mission-St. Joseph’s system in 2019. Despite, difficult media coverage and 3 warnings from CMS about quality shortcomings, it’s profitable.
On December 10, 2025, I had quadruple by-pass surgery there. Over the course 2 ED visits in November, the 5-day inpatient stay and post-surgical interactions since, I had the opportunity to see its operations firsthand. The bottom line for me is this: HCA Healthcare is a successful business. It operates Mission aggressively and profitably. Every employee knows it. Staffing is lean. There are no frills. Coordination of care is a crap shoot: connectivity between offices, services, and physicians is limited; price transparency is a joke and care navigation for patients like me is haphazard. But all say patient care is not compromised as my surgical experience confirmed. Every hospital aspires for the same. All are trying to do more with less.
HCA’s financial success is not the exception in acute care, but it’s certain to draw attention to business practices that enable results like it enjoyed last year across the spectrum of hospital care. And it’s certain to intensify competition between hospitals to get the upper hand.
Paul
References in addition to citations in the sections that follow:
HCA faces up to $1.4B hit from ACA, Medicaid headwinds Beckers January 27, 2026 https://www.beckershospitalreview.com/finance/why-hca-says-it-can-navigate-2026-policy-uncertainty
Sections in Today’s Report
- Quotables
- Economy
- Hospitals
- Insurers
- Population Health
- Prescription Drugs
Quotables
McKinsey Health Institute on Healthspan Science: “Healthspan science, which focuses on biomedical innovations that target the biological aging process and contribute to healthy longevity, is a fast-growing field. The five-year average for investment quadrupled in the past decade, and clinical trial initiation has grown 27% over five years, leading to a pipeline of several hundred drug candidates. The field is expected to continue growing, but there is no consensus on when biomedical innovations that can meaningfully target fundamental aging processes are likely to emerge.
Improved healthspans could have enormous benefits on society. Age-related diseases—including cancers, neurodegenerative conditions such as Alzheimer’s, and musculoskeletal conditions such as arthritis—account for more than 600 million disability-adjusted life years (DALYs) annually, or one-third of the total global burden of disease. Addressing half of this burden could lead to fewer early deaths and less time spent in poor health, and it could translate to as much as about $2 trillion in annual GDP uplift due to increased employment from an expanded adult workforce. The potential to enable people to live healthier for longer through new tools is more relevant now as societies look to address shifting demographics, lower birth rates, and smaller dependency ratios, which are putting social security and health systems at risk.”
Healthspan science may enable healthier lives for all August 29, 2025 https://www.mckinsey.com/mhi/our-insights/healthspan-science-may-enable-healthier-lives-for-all
Wharton’s Harker on monetary policy: “The United States faces an era marked by both long-term budget deficits and high national debt levels. In that environment, interest rate increases designed to fight inflation also raise the government’s debt-service costs. Without a credible fiscal response, monetary tightening becomes less effective over time. During my years on the FOMC, I often emphasized that the Fed’s tools work best when fiscal policy is sustainable. Monetary policy can temporarily reduce inflation, but it cannot sustain stable expectations on its own.”
Patrick T. Harker, former president and CEO of the Federal Reserve Bank of Philadelphia, Rowan Distinguished Professor at the Wharton School, University of Pennsylvania Knowledge at Wharton “When Monetary Policy Is Asked to Do Too Much” January 28, 2026 https://knowledge.wharton.upenn.edu/article/when-monetary-policy-is-asked-to-do-too-much
Opinion: Reduce undergraduate training for physicians: “Several recent op-eds have argued for shortening medical school from 4 years to 3. As a current medical student, the logic is straightforward and compelling: train physicians more quickly, reduce debt, and help address a growing doctor shortage. A handful of U.S. medical schools have already adopted this model. However, these proposals largely miss the true source of inefficiency in American medical training. The real problem isn’t the length of medical school — it’s the 4-year undergraduate degree required before it….
Many commentators are right: the process of becoming a doctor should be shorter, more affordable, and more equitable. But the solution is not to compress medical school, where students acquire the scientific knowledge and clinical skills essential to practicing medicine. The solution is to rethink the path that leads there. If the nation truly needs more doctors, we should start by removing unnecessary years from the road to becoming one.”
Cut Years Off College, Not Medical School MedPage January 29, 2026 https://www.medpagetoday.com/opinion/second-opinion
Vedala on medical education reform: “Reforming U.S. medical education should not be framed as “making it easier.” It should be framed as making it smarter — more aligned to modern care, less financially punishing and better matched to the workforce the country needs.
If training can be shortened where it makes sense, the cost and debt burden can be reduced while preserving what matters most — clinical competence and patient safety. “
Krishna Vedala, MD, MPH, MBA, FACHDM, Dipl. ABOM, CSPPM, CSPR, CSBI, FACP, Why medical training in the U.S. needs to be reformed Health Data Management https://hdmgroup-1.hubspotpagebuilder.com/hdm-onestory-why-medical-training-in-the-u.s.-needs-to-be-reformed
Economy
CMS on 2024 Health spending: “Health care spending in the US reached $5.3 trillion and increased 7.2% in 2024, similar to growth of 7.4% in 2023, as increased demand for health care influenced this two-year trend. As in 2023, the use and intensity of health care goods and services continued to grow rapidly in 2024, particularly for hospital care, physician and clinical services, and retail prescription drugs. The insured share of the population remained relatively high in 2024, at 91.8%, after its peak in 2023 of 92.5%. Health care spending growth continued to outpace overall economic growth in 2024, and as a result, the health care share of the economy increased from 17.7% in 2023 to 18.0% in 2024.
National Health Care Spending Increased 7.2 Percent In 2024 As Utilization Remained Elevated Health Affairs January 14, 2026 https://www.healthaffairs.org
Harker on monetary policy: “The United States faces an era marked by both long-term budget deficits and high national debt levels. In that environment, interest rate increases designed to fight inflation also raise the government’s debt-service costs. Without a credible fiscal response, monetary tightening becomes less effective over time. During my years on the FOMC, I often emphasized that the Fed’s tools work best when fiscal policy is sustainable. Monetary policy can temporarily reduce inflation, but it cannot sustain stable expectations on its own.”
Patrick T. Harker, former president and CEO of the Federal Reserve Bank of Philadelphia, Rowan Distinguished Professor at the Wharton School, University of Pennsylvania Knowledge at Wharton “When Monetary Policy Is Asked to Do Too Much” January 28, 2026 https://knowledge.wharton.upenn.edu/article/when-monetary-policy-is-asked-to-do-too-much
Gallup on employee engagement: The percentage of U.S. employees who are actively engaged at work averaged 31% in 2025, unchanged from 2024, according to Gallup’s employee engagement survey. This follows several years of decline from a high of 36% in 2020, which came after a decade of steady growth. (Actively disengaged 17%)…
Between 2020 and 2025, younger U.S. workers experienced the largest drops in engagement. The percentage of Generation Z and younger millennials who are engaged at work dropped by eight points, while older millennials (born 1980 to 1988) dropped by nine points. Generation X declined in engagement by six points, and baby boomers saw no change in engagement since 2020
U.S. Employee Engagement Declines From 2020 Peak Gallup January 28, 2026 https://www.gallup.com/workplace/701486/employee-engagement-declines-2020-peak.aspx?utm_source=alert&utm_medium=email&utm_content=morelink&utm_campaign=syndication
Pitchbook outlook on IPO exits in 2026: Liquidity in US VC showed meaningful signs of improvement in 2025, driven by a handful of high-profile IPOs that delivered much-needed exits and renewed confidence in public markets. But these wins were the exception rather than the rule. Just 48 companies went public—roughly in line with other post-pandemic years—and only 17 reached the market as unicorns. That level of activity is not enough to meaningfully unwind the venture backlog, with more than $4.3 trillion of value still locked in private unicorns alone. Following four straight years of negative net cash flows to LPs, exit pressure continues to build, particularly as the US venture market has more than tripled in value since 2020 to $7.4 trillion. Without a broader pipeline of large IPOs, fundraising challenges will likely persist, ultimately constraining future dealmaking.
Our outlook for 2026 IPOs is cautiously optimistic. Macroeconomic factors resemble those in early 2025, but momentum has built behind VC-backed IPOs. With SpaceX, OpenAI, and Anthropic, among others, speculated to go public, 2026 will be a pivotal moment for VC: Either it drives the next phase of growth and fundraising, or it pushes LPs further away from the market.
2026 IPO Outlook for US VC: What 2025’s IPO momentum means for 2026 chrome-extension://hbgjioklmpbdmemlmbkfckopochbgjpl/https://pitchbook.brightspotcdn.com
Governance
Corporate Board Member 23rd annual “What Directors Think” survey: Highlights:
- M&A rebounds: 40% of directors are prioritizing growth through M&A in 2026, with nearly half allocating capital to potential deals. Despite concerns over a potential downturn, fewer than 1 percent see M&A as a top risk.
- AI tops capex: 42% expect technology to dominate capital investments this year, with AI emerging as the top focus, even as boards feel mounting pressure to integrate AI into governance oversight.
- Scenario planning expands: 84% of directors have changed their approach to scenario planning, investing more time and broadening risk scenarios, though 53% say they lack real‑time data between meetings to support effective oversight.
- Strategy over slides: 58% of directors want fewer presentations and more time for forward‑looking strategic discussion, with strategic planning topping the agenda and rising interest in adding directors with specialized AI expertise
What Directors Think – 2026 Report – Corporate Board Member
Hospitals
Median Hospital expenses per day
Government: $2,623 vs. US $3,089
Non-profit: $3,186 vs. US $3,449
For-profit: $2,463 vs. US $2,623
Hospital Expenses per Adjusted Inpatient Day by Ownership Type https://www.kff.org/health-costs/state-indicator/expenses-per-inpatient-day-by-ownership
NC hospitals vs US national median: 2024 (Pop: 11,046,024, beds: 21, 921)
- RN shortage: 16,010 3250
- Nurses/bed:4.1 vs.7
- Medicare patients/ nurse 1.7 vs. 8
- Beds/10k population: 19.8 vs. 6
- Admissions/bed: 9.4 vs. 5
- ALOS: 5.6 vs. 2
- Medicare admissions/hospital: 2459 vs. 2083
- Average patient risk score/10: 6.7 vs. 93
- Overwhelm score/10: 8.11 (#5 overall)
Nursa Study 2024 Hospital Staffing https://nursa.com/
Insurers
KFF Report; Prior auth in MA: “Nearly 53 million prior authorization requests were submitted to Medicare Advantage insurers on behalf of Medicare Advantage enrollees in 2024, an increase from 2023 (49.8 million) as the number of people enrolled in Medicare Advantage has grown. Substantially fewer prior authorization requests for traditional Medicare than Medicare Advantage beneficiaries were submitted to CMS – just over 625,000 in fiscal year 2024.” Highlights:
- In 2024, there were 1.7 prior authorization requests on average per Medicare Advantage enrollee, a slight decline from 1.8 in 2023.
- In 2024, Medicare Advantage insurers fully or partially denied 4.1 million prior authorization requests, which is a somewhat larger share (7.7%) of all requests than in 2023 (6.4%) and similar to 2022 (7.4%).
- A small share of denied prior authorization requests was appealed in Medicare Advantage –11.5% in 2024, similar to 2023 (11.7%).
- Though a small share of prior authorization denials were appealed to Medicare Advantage insurers, most appeals (80.7%) were partially or fully overturned in 2024.
Medicare Advantage Insurers Made Nearly 53 Million Prior Authorization Determinations in 2024 KFF January 28, 2026 https://www.kff.org/medicare/medicare-advantage-insurers-made-nearly-53-million-prior-authorization-determinations-in-2024
WSJ on GOP shift on MA Policy: “Wall Street is discovering that the Republican Party’s longstanding romance with Medicare Advantage has entered a more complicated chapter.
For decades, investors in the privatized version of Medicare grew accustomed to a familiar political rhythm. Since its inception, Medicare Advantage has been favored by Republicans, leading markets to expect more generous treatment under Republican administrations than Democratic ones.
That pattern largely held in recent years. The first Trump administration delivered favorable policies, while the Biden administration moved to rein in aggressive Medicare Advantage coding practices. Even at the start of Trump’s second term, his administration initially boosted payments to insurers for this year by more than anticipated.
Which is why it coming as a near-unanimous surprise on Wall Street when the Centers for Medicare and Medicaid Services, now led by Dr. Mehmet Oz, abruptly shifted course. The agency proposed roughly flat payment rates—far below industry expectations for a second-straight increase of about 5%. In a statement, Oz said the policy would help protect “taxpayers from unnecessary spending that is not oriented towards addressing real health needs.”
The rate tightening partly reflects an effort to curb payments for diagnoses that are identified on paper but not actively treated…
The shock wasn’t just the math. It was also the timing. While initial rate proposals are often revised higher before being finalized in early April, the willingness of a Republican administration to squeeze the industry just ahead of the midterm elections marked a clear departure from precedent. Tighter payments could prompt insurers to cut back on benefits during the fall enrollment season, a politically sensitive move given Medicare Advantage’s popularity with seniors.”
Investors Assumed Medicare Advantage Was Safe Under the GOP. They Were Wrong. WSJ January 28, 2026 www.wsj.com
Polling:
KFF on insurance subsidies: “Most Americans believe Congress did the “wrong thing” by not extending the tax credits, including 89% of Democrats and 72% of Independents, according to a poll published today by health policy research organization KFF. But 63% of Republicans said Congress did the “right thing” by not extending the subsidies, the poll found.
Still, health care costs top the public’s economic anxieties across all three parties, with more than 40 percent of voters saying the issue will have a major impact on their decision to vote in the midterms and which party they support, according to the survey.
“Republicans won the legislative battle to let the enhanced ACA tax credits expire, but that helped make health costs more of an economic worry and voting issue, and Democrats are well positioned to capitalize on that in the midterms,” KFF President and CEO Drew Altman said in a news release.
The national poll was conducted online and by telephone from Jan. 13 to 20 among 1,426 U.S. adults.”
The subsidy saga continues https://www.politico.com/newsletters/politico-pulse/2026/01/29/the-subsidy-saga-continues-00753525
Harris poll: Institutional trust: In its October 2025 poll, Harris found trust in the healthcare system at 53%–below small business (88%), non-profit organizations (73%) and higher education (68%) but above big business (46%), news media (42%) and the federal government (40%).
Harris Poll www.theharrispoll.com
Population Health
Census Bureau: 2025 Population growth slowdown: “After a brief post-pandemic uptick – 0.8% in 2023 and a robust 1.0% in 2024 – U.S. population growth slowed to 0.5% between 2024 and 2025.
A sizeable reduction in net international migration – people moving between the United States and other countries – was the main reason for the slowdown. Natural change, the difference between the number of births and deaths, remained relatively stable.
Both the nation and states saw their population growth slow in the last year but for different reasons…”
U.S. Population Growth Slowest Since COVID-19 Pandemic January 27, 2026 https://www.census.gov/library/stories/2026/01/pop-estimates-state-change.html?utm_campaign=20260128aco&utm_medium=email&utm_source=govdelivery
AAP counters CDC vaccination guidance: The American Academy of Pediatrics recommends children be vaccinated against 18 diseases, more than the U.S. government directs after it overhauled its schedule.
The doctors’ group, which released its recommendations Monday, kept its guidance largely unchanged from its previous version from last year. The group said it doesn’t endorse the Centers for Disease Control and Prevention’s childhood-vaccine schedule. The agency now recommends all children get vaccinated against 11 diseases.
AAP: CDC plan to remove universal childhood vaccine recommendations ‘dangerous and unnecessary https://publications.aap.org/aapnews/news/34104/AAP-CDC-plan-to-remove-universal-childhood-vaccine?autologincheck=redirected
JAMA Study: Birth rate ethnicity trend: “From 2016 to 2024, the total number of annual live births in the US decreased by 8.4%, from 3.9 million to 3.6 million. This period was defined by a significant demographic crossover. Births to non-Hispanic White individuals decreased from 52.6% to 49.6% of the total, decreasing below 50% for the first time…
This analysis documents a major demographic transition; non-Hispanic White births now constitute less than half of US births, while Hispanic births exceed one-fourth…
This diversification occurs amid persistent health care workforce shortages and maternity unit closures in underserved regions…
Medicaid finances over 40% of all births,5 and proposed reductions to eligibility or postpartum coverage would disproportionately harm mothers of racial and ethnic minority groups, potentially reversing improvements in maternal mortality rates..”
Trends in US Live Births by Race and Ethnicity, 2016-2024 JAMA January 30, 2026 https://jamanetwork.com/journals/jamanetworkopen/fullarticle/2844571
Prescription Drugs
CMS Most Favored Nation Drug Pricing Update: Last week, the Centers for Medicare & Medicaid Services unveiled the next 15 high-spend medicines up for price negotiations under the program. Meds up for first-time Medicare price negotiations this year include GSK’s inhaler Anoro Ellipta, Gilead’s HIV blockbuster Bitkarvy, AbbVie’s Botox and Botox Cosmetic brands, Takeda’s inflammatory bowel disease drug Entyvio and Johnson & Johnson prostate cancer medicine Erleada, according to a Jan. 27 release from the CMS.
The 15 chosen accounted for $27 billion of Medicare spending between November 2024 and October 2025, per CMS. The negotiated prices would take effect in 2028. It marks the first time that Medicare can select prescription drugs administered in doctors’ offices and other outpatient settings for the negotiations.
Drugmakers must decide by Feb. 28 if they plan to participate in negotiations with the government. Those that opt out must either pay an excise tax of up to 95% of their U.S. sales or withdraw their drugs from Medicare and Medicaid coverage.
Biopharma Sentiment Index | Q1 2026: “The latest BPSI shows signs of a more durable phase in the biopharma recovery, with improvements across every metric.
After four years of hunkering down, the mood in biopharma turned sharply more optimistic heading into 2026. The Biopharma Sentiment Index (BPSI) climbed to 90 in Q1, up from 78 the prior quarter — a broad-based shift with all 10 core measures improving.
While still below the neutral benchmark of 100, the move marks a decisive change in mindset after a bruising stretch for the industry. The rebound is especially striking as the US consumer confidence plunged to a 12-year low, underscoring biopharma’s countercyclical streak.”
Beyond the headline gains, the gap between current conditions and future expectations narrowed considerably in Q1, a key predictive signal that the early-stage recovery is stabilizing. https://endpoints.news/biopharma-sentiment-index-q1-2026
