Health care and climate: Risks are growing

Bloomberg Intelligence

This analysis is by Bloomberg Intelligence Director of ESG Research Eric Kane and Bloomberg Intelligence Senior Associate Analyst Melanie Rua. It appeared first on the Bloomberg Terminal.

The Atlantic hurricane season is in its peak month, and hospital corporations such as Community Health Systems remain vulnerable to the physical effects of climate change. Community derives more than 30% of revenue from Florida and Texas, where patient evacuations and facility closings may increase with the greater frequency and severity of climate events. Meanwhile, disclosure on these risks remains limited.

Climate change presents chronic risk for acute care

Hospital corporations, including HCA and Community Health Systems, have significant exposure to the physical impacts of climate change. Facilities in Florida account for 12% of Universal Health Services’ net patient revenue and 9% of the company’s total licensed beds, based on the latest American Hospital Association (AHA) data. For Community Health, 10% of net patient revenue and beds are in Florida. These companies will likely face increased costs associated with enhancing resilience and lost revenue due to service disruptions.

Last year, HCA temporarily suspended operations at several facilities across Tampa Bay due to Hurricane Idalia, and relocated its patients. In 2022, the company lost an estimated $85 million in revenue associated with the impact of Hurricane Ian, primarily at its Florida facilities.

US Hospital Corps’ Beds, Revenue: Texas & Florida

There’s no cure for the physical risk of climate

For HCA, hospitals in Florida and Texas account for more than 50% of total licensed beds and net patient revenue, suggesting significant exposure to the increased frequency and intensity of storms associated with climate change. HCA and its publicly traded hospital peers acknowledge the risks to their businesses from climate change, but don’t report key metrics related to this issue, including the size and number of facilities located in 100-year flood zones. The lack of disclosure hampers investors’ ability to assess this risk, even as more frequent extreme weather events continue to affect operations and physical assets.

In 2022, a study published in GeoHealth found that 147 of 682 hospitals in 78 metropolitan areas would flood in the event of a Category 1 hurricane. The number jumps to 306 for a Category 4 storm.

HCA Hospitals Suspended Due to Hurricane Idalia

Preparation for climate impacts linked to reimbursement

For HCA, Tenet, Community and Universal Health, up to 44% of total revenue can be tied to planning for emergencies, including hurricanes. The link comes from the Centers for Medicare & Medicaid Services Emergency Preparedness Rule. The policy requires that hospitals develop risk assessment and emergency planning for situations including loss of power, cyberattacks and hazards that are likely in a geographic area. Facilities must also establish communications programs and conduct training and testing related to these emergencies. Compliance is mandated for hospitals to maintain eligibility for government reimbursement programs.

CMS developed the Emergency Preparedness Rule in response to recent natural disasters, including Hurricane Sandy, which caused more than $3 billion in damages to hospitals in New York.

Listed hospitals don’t sign carbon pledge, despite risk

Nearly 140 organizations representing 943 hospitals and thousands of other providers have agreed to reduce their greenhouse-gas emissions 50% by 2030 and achieve net-zero emissions by 2050. These commitments to the White House’s Health Sector Climate Pledge could yield significant results in efforts to address climate change, as the industry accounts for roughly 9% of total US emissions. Despite their considerable contribution and exposure to the impacts of global warming, so far none of the top publicly traded hospital groups (Tenet, HCA, Community Health and Universal Health) have signed the commitment or even begun to report total energy consumption.

Globally, the health-care industry accounts for nearly 5% of total greenhouse-gas emissions, suggesting it would be the fifth largest emitter if it were a country.

HCA’s Bloomberg Environmental Score

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