Major For-Profit Healthcare Providers Maintain 2025 Outlooks Amid Uncertain Landscape

Despite posting strong first-quarter results for 2025, major for-profit healthcare providers are exercising caution and maintaining their full-year outlooks. HCA Healthcare, Tenet Healthcare, Universal Health Services (UHS), and Community Health Systems (CHS) are navigating an evolving political landscape and facing challenges to traditionally reliable revenue streams.

Political Uncertainty and Medicaid Concerns

The Trump administration's potential policy changes, particularly regarding Medicaid, have left healthcare providers in a state of uncertainty. Executives across the industry report a lack of clarity on the administration's priorities, with HCA CEO Sam Hazen stating, "It is unclear how these efforts might be carried out and what effects they may have on our business."

Proposed Republican cuts to Medicaid, including the implementation of work requirements, have raised concerns among providers. The delay in approvals for new Medicaid state supplemental programs is also impacting revenue projections. These programs, which have historically provided a revenue boost for providers, have seen slower approval rates under the Trump administration compared to the previous administration.

Tariff Impacts and Supply Chain Considerations

Healthcare providers are closely monitoring the potential impact of tariffs on their operations. While most systems report that their partnerships with group purchasing organizations should insulate them from immediate effects, long-term concerns persist. HCA CFO Mike Marks noted that about 75% of the health system's supply expense comes from domestic products, Canada, Mexico, or from products currently exempt from tariffs.

However, the possibility of future tariffs, particularly on pharmaceutical imports from China, remains a concern for the industry. Executives are hesitant to provide specific estimates on the potential financial impact of tariffs due to the rapidly changing nature of trade policies.

Volume Metrics and Revenue Stream Disruptions

Several providers reported declines in various volume metrics, with UHS experiencing the most pronounced issues. The company saw a 1.6% year-over-year decrease in behavioral health adjusted admissions, traditionally a core growth area. UHS CEO Marc Miller attributed some of the decline to atypical weather conditions affecting youth outpatient behavioral health programs.

HCA Healthcare reported a 2.1% year-over-year dip in outpatient surgeries, while CHS saw a 3% decline in same-store surgeries. These volume declines, although slim, are particularly relevant as the industry faces potential recession worries that could further pressure volume growth.

As the healthcare landscape continues to evolve, major for-profit providers are maintaining a cautious outlook for 2025. The interplay of political uncertainty, potential policy changes, and operational challenges will likely shape the industry's trajectory in the coming months.