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Picture of health: Hospitals are finally turning a corner

It's been a long, hard road but the vital signs for publicly traded hospitals in the US are healthy. When the pandemic hit in March 2020, service providers experienced a sharp reduction in the number of elective surgeries, physician office visits and emergency room volumes at hospitals. Would-be patients were holed up at home and doctors and nurses were bravely tending to those sick with COVID-19.

Spooked investors ran for the hills, causing bond yields to spike. But things have since turned a corner. For one, those bond yields have been steadily compressing since Q4 last year. Similarly, share prices have rallied year-to-date. Investors accurately predicted a full recovery.

As of Q2 this year, hospitals are also now finally seeing patients again in meaningful numbers and, in some cases, treatment has recovered to pre-pandemic levels if not higher.

Return to form

For Community Health Systems, total surgeries were up by 1% in the second quarter of 2021 compared to the same period in 2019. HCA Healthcare has reported that total admissions were up 5.1% over the same comparative periods.

Across the range of metrics—surgeries, admissions, emergency room visits—Community Health, HCA and Tenet Healthcare have all reported marked improvements year-over-year, which is understandable given the situation in the second quarter last year. Nothing is guaranteed, but it appears that the worst is over.

Critical care

Many companies wouldn't be here today were it not for government support. Swift governmental action calmed markets and provided much needed liquidity to hospitals, allowing them to bridge the gap of negative operating metrics into a recovery.

Under the US$2 trillion CARES Act, US$178 billion in funding was distributed to hospitals and other healthcare providers to reimburse lost revenues and cover unforeseen expenses stemming from the pandemic. The Medicare Accelerated and Advance Payment Program, which made available accelerated payments of Medicare funds to increase cash flow to providers, was also rolled out.

Community Health, HCA and Tenet all benefited from these government programs. One year on and those actions have shown to have paid off.