Economic trends affect patient volumes at two large health systems

Macroeconomic factors are causing a moderate drop in demand for healthcare services, according to insights from executives with a pair of leading for-profit hospital chains.

At Community Health Systems (CHS), the first quarter of 2025 brought strong hospital volumes, but those dipped during the middle part of the year. Same-store adjusted admissions were 0.7% lower year-over-year in Q2 after that same metric had risen by 2.6% in Q1.

Starting in Q2, “consumer confidence dropped off pretty significantly,” said Kevin Hammons, president and interim CEO. “[There was] more disruption out of Washington that started concerns about inflation, impact of tariffs and so forth.”

Consumers’ collective outlook appeared to stabilize in Q3, during which adjusted admissions rose by 0.3% year-over-year, although surgery volumes “remain a little bit soft,” Hammons said. “We’re seeing that across the industry.”

At CHS, that trend largely is seen in outpatient surgeries for commercially insured patients, suggesting economic circumstances are a factor, he said.

“It’s probably just deferred care, and it is yet to be seen whether that deferred care comes back in Q4 or in early 2026,” Hammons added.

Amid what was described as a strong financial and operational performance for 2025 to date, HCA Healthcare experienced less volume growth than it initially anticipated, said Mike Marks, executive vice president and CFO. The company had been expecting an increase of between 3% and 4% but instead is in the 2% to 3% range.

Because the fall-off compared to projections largely is in the Medicaid and self-pay segments, the resulting payer mix has been favorable, he added.

Hammons and Marks spoke as part of the UBS Global Healthcare Conference during the week of Nov. 10.

ACA subsidies a looming factor

A wild card in the volume outlook is enrollment in the Affordable Care Act (ACA) insurance marketplaces. Enhanced subsidies have driven a surge in ACA enrollment from 10.3 million before their introduction in 2020 to 24.3 million this year, and now their fate is in the hands of Congress.

Marketplace enrollees comprise 8% of HCA’s volume, but the impact of the subsidy question on future volumes could be somewhat muted. The status of the subsidies in 2026 will affect whether HCA comes out on the higher or lower end of an anticipated 2% to 3% volume increase, Marks said.

Trends in other payer segments mean HCA may not have as much riding on the subsidy question as the organization’s marketplace volume might indicate.

“The movement into Medicare will continue to be at a bit of an elevated level here in ’26 and really into ’27 and ’28,” Marks said. “Broadly, we’re comfortable that employer-sponsored insurance seems pretty steady.”

If the subsidies expire, he said, “There will be a component of people who are on the exchanges now that we think go back to employer-sponsored insurance.”

The full impact on the marketplaces likely would not be felt in the first year after the subsidies expire. For example, the Congressional Budget Office has projected that the number of uninsured would be 2.2 million higher in the first year and 3.7 million higher in year two, relative to baseline.

“We actually think it may take two or three years for that to fully settle out,” Marks said. “People who are on the exchanges that have chronic diseases and the like, I think they’re going to try to stay on the exchanges. They may drop [down] a metal tier.”

Geography a key variable

At CHS, marketplace enrollees constitute less than 5% of net revenue, and not all of that group receives the enhanced subsidies. The organization’s relatively low exposure may simply be due to having less of a presence in markets where larger segments of the population are on subsidized ACA plans, Hammons said. Medicaid non-expansion states generally have higher shares of residents receiving ACA subsidies.

There’s another reason an expiration of the subsidies might not bring a profound change in KPIs for systems such as CHS: Subsidized marketplace enrollees who receive hospital services already translate to uncompensated care, although generally not to the same extent as an uninsured patient.

“If you think about the patients who are getting subsidized for their health insurance premiums, we’re also not likely to be collecting copays and deductibles either from those patients,” Hammons said. “We’re already absorbing that piece.”

In an investor call last month, Hammons said there could be a bit of a volume and revenue jump in Q4 if marketplace enrollees book elective surgeries and other procedures ahead of potentially losing their coverage in 2026.

“I don’t think it’s a material needle mover for us, but it could be a slight positive,” he said.

Health insurers expect a revenue drop

Payers also are watching to see whether the subsidies continue in 2026. Wayne DeVeydt, CFO for UnitedHealth Group, spoke at the UBS conference and said “it’s probably prudent to assume low-single-digit [margin]” for the company’s marketplace health plans next year.

That outlook represents a downturn from a margin of 7% to 9% in that segment across recent years.

“If the subsidies get extended in any capacity, that’s usually a positive sign because you’ll get some of the healthier lives that couldn’t afford the product actually coming back in,” DeVeydt said. “It improves the risk pool, and that will be a catalyst for margin expansion. But we’re not assuming [an extension] at this stage.”

At HCA, efforts entail both advocating for an extension of the subsidies and preparing over the past 12 to 18 months for their termination, Marks said. Steps in the latter area include resiliency initiatives that focus on operational efficiencies, strategic capital investments, digital transformation and patient financial support programs.