mark kimbroughvp, investor relations chuck hallpresident, north florida division
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Mark KimbroughVP, Investor Relations Chuck HallPresident, North Florida Division. Cautionary Note Regarding Forward-looking Statements. - PowerPoint PPT PresentationTRANSCRIPT
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Mark Kimbrough VP, Investor Relations
Chuck Hall President, North Florida Division
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Cautionary Note Regarding Forward-looking StatementsCautionary Note Regarding Forward-looking Statements
HCA’s management will be making some forward-looking statements during today’s presentation. Those forward-looking statements are based on management’s current expectations and are subject to risks and uncertainties that may cause those forward looking statements to be materially incorrect.
Certain of those risks and uncertainties are discussed in HCA’s filings with the Securities and Exchange Commission, including the company’s report on Form 10-K and its quarterly reports on form 10-Q, to which you are referred. Management cautions
you not to rely on, and makes no promises to update any of the forward looking statements.
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Collective KnowledgeCollective Knowledge
• 190,000 employees
• 189 hospitals
• 92 surgery centers
• 14 million patients treated annually
• 5.2 million emergency room visits annually
• 190,000 employees
• 189 hospitals
• 92 surgery centers
• 14 million patients treated annually
• 5.2 million emergency room visits annually
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What Will Drive HCA’s Future SuccessWhat Will Drive HCA’s Future Success
• Located in Large, Growth Markets and Aging Population• Located in Large, Growth Markets and Aging Population
• Capital Investments• Capital Investments
• Quality Initiatives• Quality Initiatives
• Patient Safety• Patient Safety
• Prudent use of Company’s Strong Cash Flows• Prudent use of Company’s Strong Cash Flows
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HCA Hospitals Locatedin Growth Markets
HCA Hospitals Locatedin Growth Markets
Switzerland
U.K.
Percent Growth in Market Population
2000-2005Compared to the
National Average of 4.5%
Percent Growth in Market Population
2000-2005Compared to the
National Average of 4.5%
Generally 25%-40% Market Share
40% of facilities in Texas & Florida
Generally 25%-40% Market Share
40% of facilities in Texas & Florida
Las Vegas+22%
Las Vegas+22%
Southern California
+9%
Southern California
+9%
Denver+9%
Denver+9%
Dade+8%
Dade+8%
Nashville+8%
Nashville+8%
Panhandle+10%
Panhandle+10%
Tampa Bay+8%
Tampa Bay+8%
Dallas/Ft. Worth+12%
Dallas/Ft. Worth+12%
Austin+18%
Austin+18%
Richmond+8%
Richmond+8%
Palm Beach+11%
Palm Beach+11%Houston
+10%Houston
+10%
Kansas City+5%
Kansas City+5%
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Source: American Hospital Association, Bureau of Labor Statistics and Goldman Sachs Research estimates.
4%
5%
6%
7%
8%
9%
10%
19
501
955
19
601
965
19
701
971
19
721
973
19
741
975
19
761
977
19
781
979
19
801
981
19
821
983
19
841
985
19
861
987
19
881
989
19
901
991
19
921
993
19
941
995
19
961
997
19
981
999
20
002
001
20
022
003
20
04Y
TD
Un
emp
loy
men
t R
ate
-6%
-5%
-4%
-3%
-2%
-1%
0%
1%
2%
3%
4%
Inp
atie
nt
Ad
mis
sio
ns
Gro
wth
Unemployment Rate Inpatient Admissions Growth
2 Year Lagged Correlation
- R2 of 0.74 since 1980- R2 of 0.66 since 1978- R2 of 0.48 since 1970
Improving unemployment rate in mid-2003 implies mid-2005 rebound in admissions
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Socio-Demographics—Age WaveDriving Healthcare Utilization
Socio-Demographics—Age WaveDriving Healthcare Utilization
20002001
20022003
20042005
20062007
20082009
20102011
20122013
20142015
95
100
105
110
115
120
125
Acu
te C
are
Uti
lizat
ion
Ind
ex(2
003=
100)
Baby Boomer Impact Accelerates
1.58% CAGR 2003-2012
1.58% CAGR 2003-2012
121
119
117
115
113
112
110
108
106
105
103
102100
9897
96
1.7%1.6%
1.6%1.6%
1.5%1.6%
1.6%1.6%
1.6%1.6%
1.6%1.5%
1.6%1.5%
1.4%
1.56%3-Year CAGR
1.59%3-Year CAGR
1.58%3-Year CAGR
1.62%3-Year CAGR
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What Will Drive HCA’s Future SuccessWhat Will Drive HCA’s Future Success
• Capital Investments• Capital Investments
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Investments in Our FacilitiesInvestments in Our Facilities
• $7.6 billion in existing facilities since 2000 ($1.5 billion ’04)
• $35,700 per bed annually
• $130 million in information technology
• $300 million in patient safety technologies since ’97
• $7.6 billion in existing facilities since 2000 ($1.5 billion ’04)
• $35,700 per bed annually
• $130 million in information technology
• $300 million in patient safety technologies since ’97
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Distribution of Capital Dollars Remains Unchanged2003 and beyond
Ongoing Projects in Capital Plan
New & Expanded Services
16%/$690M
Land & Improvements
12%/$505M
Surgery/Special Units
21%/$875M
Beds14%/$590M
New Facilities8%/$340M
ReplacementFacilities
10%/$420M
Outpatient Services/MOBs
11%/$480M
ER Services8%/$325
1,611 New Beds
56 Facilities with Surgery and/or ICU/CCU expansions
Three New Facilities 310 Beds
Open Heart, Cardiology
Oncology, etc.
33 ERExpansions
Three Facilities511 Beds
Represents $4.2B of projectsRepresents $4.2B of projects
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Transactions totaling $62 million completed20–30 imaging center and 8-10 surgery center transactions expected to be
completed over the next 12 months
Sarah Cannon Research Institute
(Nashville)
Sarah Cannon Research Institute
(Nashville)
Austin Radiology Assoc.2 imaging centers
Austin Radiology Assoc.2 imaging centers
Diversified Radiology (Denver)
4 imaging centers/fifth under
construction
Diversified Radiology (Denver)
4 imaging centers/fifth under
construction
Thousand Oaks
Diagnostic Imaging
Thousand Oaks
Diagnostic Imaging
Millcreek Imaging CenterSalt Lake City, UT
Millcreek Imaging CenterSalt Lake City, UT
HCA Surgery Centers
LAD Imaging Centers
(Orange City, Deltona)
LAD Imaging Centers
(Orange City, Deltona)
Total I Management, LLCTampa Bay Area/5 imaging centers
Total I Management, LLCTampa Bay Area/5 imaging centers
Outpatient Strategy Progressing
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What Will Drive HCA’s Future SuccessWhat Will Drive HCA’s Future Success
• Quality Initiatives• Quality Initiatives
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Our Recognition for QualityOur Recognition for Quality
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Satisfied Physicians
HCA physicians rank our facilities higher than that of other hospitals across the country
Satisfied Physicians
HCA physicians rank our facilities higher than that of other hospitals across the country
Source: Gallup Satisfaction Surveys 2003Source: Gallup Satisfaction Surveys 2003
50%
55%
60%
65%
70%
75%
80%
85%
90% HCA Physicians
National Avg.
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Our Commitment to Quality
Our Commitment to Quality
HCA Quality Review System (QRS)
An internal process that provides ongoing assurance that patient care servicesin HCA hospitals meet defined quality standards.
HCA Quality Review System (QRS)
An internal process that provides ongoing assurance that patient care servicesin HCA hospitals meet defined quality standards.
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Our Commitment to QualityOur Commitment to Quality
QRS surveys analyze clinical performance using:
• JCAHO survey scores
• Professional liability risk exposure
• Patient, employee, and physician satisfaction results
QRS surveys analyze clinical performance using:
• JCAHO survey scores
• Professional liability risk exposure
• Patient, employee, and physician satisfaction results
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Our Commitment to QualityOur Commitment to Quality
Previous Actual Index / Rate / LOS
Actual Index / Rate / LOS
Statiscallly Significant
@ 90% Confidence
Interval
QRS Measure Quintile Ranking Score
Subtotal / Total
Quintile Ranking Score
1.00 N 3.00 3
4.50 5.00 5
0.89% 4.00 4
99.20% 5.00 5
45.60% 3.00 3
* CAP Smoking Cessation Counseling Rate 75.00% 4.00 4
* CAP Blood Culture before Antibiotic Rate 46.00% 3.00 3
89.00% 4.00 42.30% 2.00 2
33.00 4.00 4
1.00 N 3.00 3
2.75% 4.00 4
7.00 4.00 4
0.89% 3.00 30.15% 2.00 21.02% 4.00 40.01% 5.00 50.01% 4.00 4
18.00 4.00 4Outcomes Measures (25) 25.00 4.00 4
Decubitus Ulcer Not Present On Admission RateGeneral/ Medical Hosptial - Subtotal (9)
Obstetrics (2)
Post-op Wound Dehiscence Rate
3rd & 4th Degree Vaginal Laceration Index
Post-op Hemorrhage or Hematoma RatePost-op Hip Fracture RatePost-op Pulmonary Embolism or DVT RatePost-op Sepsis Rate
Surgical (5)
QRS Measures Detail Report Section 2 (Page 2)Statu
s
QRS Measures
Operative Vaginal Delivery Rate
Overall Hosptial Mortality Index
Adult ICU LOS
Iatrogenic Pneumothorax Rate
* CAP Oxygenation Assessment Rate
* CAP Pneumoccocal Vacination Screening Rate
* CAP Antibiotic Timing (% Cases with first dose under 4 hrs)
Previous Actual Index / Rate / LOS
Actual Index / Rate / LOS
Statiscallly Significant
@ 90% Confidence
Interval
QRS Measure Quintile Ranking Score
Subtotal / Total
Quintile Ranking Score
3.50 3.00 3
2.50% 5.00 51.10 Y 2.00 2
2.50% 4.00 490.20% 4.00 487.50% 3.00 393.00% 5.00 557.40% 2.00 235.80% 1.00 190.00% 5.00 5
* AMI Smoking Cessation Counseling Rate 35.00% 2.00 225.20% 1.00 1
* HF Smoking Cessation Counseling Rate 40.00% 3.00 3* HF Discharge Instructions Provided Rate 60.00% 3.00 3
84.70% 4.00 447.00 3.00 3
= Not applicable for this facility
= Not Surveyed for this facility
= Total not applicable
* HF ACE Inhibitor Left Ventricular Systolic Dysfunction Rate
* AMI Time to PCI (% Cases within 120 hours)* AMI Time to Thrombolytic (% Cases within 30 minutes)
QRS Measures Detail Report Section 2 (Page 1)Sta
tus
QRS Measures
CABG Mortality/Complication/ALOS Index
More Than One Cardiac Cath in Same Admission RateAMI Mortality Index
Cardiovascular (16)
Bilateral Cardiac Catheterization Rate* AMI Aspirin at Arrival* AMI Aspirin at Discharge * AMI ACEI for Lt Ventricular Systolic Dysfunction* AMI Beta Blocker at Arrival* AMI Beta Blocker at Discharge
* HF Left Ventricular Function Assessment Rate
Previous Actual Score
Current Actual Score
Current Weighted
Score
Potential Score
Music City Hospital %
HCA Average
%
10.00 5
20.00 5
5.00 5
2.85 4
2.85 3
2.90 4
2.85 2
2.85 1
2.85 2
2.85 4
5.00 5
3.75 5
3.75 4
3.75 3
3.75 2#REF! #REF!
Status
2 - In the bottom 20th percentile of HCA hospitals
5 - In the top 20th percentile of HCA hospitals4 - In the top 40th percentile of HCA hospitals
Employee Overall Satisfaction
ER Overall Satisfaction
QRS Measures Detail Report Section 1
Inpatient Overall Satisfaction
Physician Overall Satisfaction
ED Length of Stay
Adult ICU Coverage
Professional Liability Experience (5)
Frequency of Claims
JCAHO Standards Survey
Medical Necessity Review Process Validated
Patient Safety (20)
Disaster Readiness
Sta
tus
Percent of Potential Score
QRS Measures
Quality Standards (35)
Perinatal Nursing Fetal Monitoring Competency
Quality Standards Survey
1 - In the bottom 20th percentile of HCA hospitals
Pt Safety Improvement Schedule
Submission (Pre-Survey)
Validation (Post-Survey)
% Patient Arm Bands Scanned
3 - In the top 60th percentile of HCA hospitals
Satisfaction Survey Results (15)
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What Will Drive HCA’s Future SuccessWhat Will Drive HCA’s Future Success
• Patient Safety• Patient Safety
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Our Commitment to Patient Safety
Our Commitment to Patient Safety
HCA Has Invested Over$300 Million InPatient SafetyTechnologies
Since ’97
HCA Has Invested Over$300 Million InPatient SafetyTechnologies
Since ’97
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Our Commitment to Patient Safety
Our Commitment to Patient Safety
eMAR & Barcoding
Ensures the five “R’s” – right patient, right medication, right dose, right time, right route of administration
The benefit to our patients…
Prevents the error patients fear most … getting the wrong medication
eMAR & Barcoding
Ensures the five “R’s” – right patient, right medication, right dose, right time, right route of administration
The benefit to our patients…
Prevents the error patients fear most … getting the wrong medication
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Our Commitment to Patient Safety
Our Commitment to Patient Safety
Electronic Provider Order Management (ePOM)
Allows physicians to input prescriptions and patient orders electronically and transmit them directly to a pharmacy or hospital department
The benefit to our patients…
Eliminates the risk of a pharmacist or clinician misreading a physician’s handwriting
Electronic Provider Order Management (ePOM)
Allows physicians to input prescriptions and patient orders electronically and transmit them directly to a pharmacy or hospital department
The benefit to our patients…
Eliminates the risk of a pharmacist or clinician misreading a physician’s handwriting
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Our Commitment to Patient Safety
Our Commitment to Patient Safety
ePOM - Safety Alerts
Drug allergies
Dose warnings
Duplicate orders
Abnormal results
Severe drug interactions
Common test interactions
Age limits for certain drugs
ePOM - Safety Alerts
Drug allergies
Dose warnings
Duplicate orders
Abnormal results
Severe drug interactions
Common test interactions
Age limits for certain drugs
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Addressing Medication Errors (ADES)Addressing Medication Errors (ADES)
Bates DW et al. Incidence of adverse drug events, potential adverse drug events. JAMA 1995;274:29-34.Bates DW et al. Incidence of adverse drug events, potential adverse drug events. JAMA 1995;274:29-34.
56%34%
6%4%
Ordering
Administration
Transcription
Dispensing
eMAR & Barcoding ePOM
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What Will Drive HCA’s Future SuccessWhat Will Drive HCA’s Future Success
• Prudent use of Company’s Strong Cash Flows• Prudent use of Company’s Strong Cash Flows
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Cash flow in 2004 Remains Positive
$1,301$1,584
$2,046
$2,786 $2,822$3,049
$0
$3,500
1999 2000 2001 2002 2003 2004
Net Cash Provided by Operating Activities1
Dollars in Millions
Excluding settlements with government agencies and investigation related costs.
New DividendNew DividendPolicyPolicy$250mm annually
Share Repurchase Program$10.0B in 8 years$2.5B “Dutch Auction” completed at $39.76 inFourth Quarter 2004
Capital Reinvestment$1.5B in 2004
1: 1999-2003 are non-GAAP numbers
8.0%8.0%
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$7.5 Billion$7.5 Billion
249 Million Shares249 Million Shares
38% of outstanding shares38% of outstanding shares
Average Price: $30.20Average Price: $30.20
$1.3B: 37.9M Shares
1: 2004 purchases through 12/31/04 2: Includes other activities affecting share balance (stock option exercises, restricted grants, and ESPP activity).
$930M: 41M Shares
$1.4B: 55.6M Shares
650M Shares 12/31/96
423M Shares2 12/31/04
Impact of Tender OfferImpact of Tender Offer
$10 Billion$10 Billion
312 Million Shares312 Million Shares
Average Price: $32.13Average Price: $32.13
$3.1B: 77.4 Shares
$1.1B: 31.1M Shares
$282M: 6.2M Shares
$706M: 19.2M Shares
$1.3B: 43.5M Shares
$1.4B: 55.6M Shares
$1.3B: 37.9M Shares
$930M: 41M Shares
2004
200320022001
2000
1999
1998
1997
$40.0
7$35.7
6$45.53
$36.88
$28.65
$24.61
$22.68
$33.59
1Avg
Sha
re P
rice
Share Repurchase
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Prudent Financial Strategy Focused on Shareholder Value
Excellent Investment Opportunities
Strong Cash Flows
Excellent Long-Term Earnings Growth Outlook
Great Assets
In Summary We Have….