Caring through COVID-19

May 12, 2020

We now begin another transition into the next, new phase of this pandemic after weathering the early phases. We expect COVID-19 will continue to affect our company in many ways until a remedy or a vaccine can be developed. In most of our markets, however, we have begun to reboot our operations safely and in compliance with official guidance from state and local governments.

From day one, we addressed the pandemic with two clear objectives. The first, to protect our people - keep them safe and keep them employed. The second, to protect the company - ensure its viability from a financial standpoint so we can continue to serve our communities for years to come. Both endure today. Thus far, we have been able to achieve them because of your partnership and hard work, which has allowed us to provide care to over 8,000 COVID-19 patients. In times of great uncertainty, our people continue to show up and pursue the path forward. We press on in that journey now.

This next transition comes with much uncertainty and much unpredictability - more than I have seen in my 37 years with the company. Many signs point to a world that will likely operate much differently than before. I believe there will be implications to the healthcare landscape that we could not have imagined just three months ago. We already know that some patients are hesitant to seek care in the ways they did previously. The realities for the global and domestic economies will bring many challenges with potentially unprecedented levels of unemployment and uninsured patients. These effects require us to take a conservative approach in bringing capacity and many services back on-line, but I am confident that if we do it effectively, we will emerge stronger and better prepared for the future.

Last week, the American Hospital Association released a report, which estimates that between March 1 and June 30 of this year hospitals and health systems across the country will experience $200 billion in losses because of COVID-19 expenses and lost revenue. Hospitals everywhere are making tough staffing choices to secure their future and remain viable with approximately 1.4 million health care workers being laid off or furloughed since the pandemic. Many systems have also decreased hours, instituted pay cuts, or reduced benefits to remain financially stable.

To weather the implications of the pandemic, we have also implemented numerous financial resiliency measures across the company. These included reduced discretionary spending, senior level and corporate salary cuts, and freezing certain initiatives. Additionally, we reduced capital spending and suspended the company’s dividend and share repurchase programs to preserve capital. While many of these decisions have not been simple, or easy to implement, we have applied them consistently across the company respecting our mission and patient-first culture, and recognizing the intrinsic value of each colleague. HCA Healthcare has not laid-off or furloughed any colleague because of the pandemic.

We anticipate the recovery of patient volumes will take some time. We will continue to limit contract labor, overtime, and other premium pay utilization, creating opportunities for our full-time and part-time colleagues to work. Our focus is to get our colleagues back to work in some capacity. Unfortunately, over the coming weeks, we still believe there will not be enough volume making it likely that many of our colleagues will not be able to work their normal hours. As a result, the pandemic pay and quarantine pay programs, which have benefited over 110,000 colleagues and are scheduled to expire May 16th, will be extended through June 27.

In addition to these pay programs, we will be evaluating certain initiatives that may be warranted – specifically with respect to staffing models, cross training staff, more effective special pay programs, and consolidating services where it makes sense. This means we need everyone to be flexible as we place people in areas where they are most needed.

Also, the HCA Healthcare senior leadership team will continue their 30 percent pay cut with other corporate and division colleagues continuing their 10-20 percent reductions through June. And lastly, hospital CEOs, CFOs, CMOs, CNOs, and COOs will take a 10 percent pay cut for eight weeks. I realize these actions are unpleasant, but they are necessary in continuing to protect and support our patients and colleagues while also recognizing the need to maintain the long-term viability of our organization. We will adjust accordingly as we learn more about our volume recovery and the full effects on the economy.

Throughout this pandemic, I have been reminded, once again, what an incredible organization we have - one that is driven by a common purpose to do the right thing for others. As we move forward, partnering even more with each other to find solutions and remaining resilient will be key. Our collective commitment and sacrifice to each other, to our physicians, and ultimately to our patients, are what will bring us through this challenge, one step at a time. I will say it again, at HCA Healthcare, we do more than say we care like family - we show it. Every corner of this enterprise has come together to do what’s right, and I thank you for that dedication and for your continued guardianship of our mission and culture.

Sincerely,

Sam Hazen, CEO