One week after Americans voted to send Donald Trump back to the White House, Saum Sutaria, CEO of Tenet Healthcare, took to the stage Tuesday at the UBS Global Healthcare Conference in Rancho Palos Verdes, California, to address how healthcare providers might fare under a second Trump term.
The CEO spoke about Tenet’s undeterred plans for expansion and whether he thought the president-elect would make good on Republicans’ promise to bring “massive” changes to healthcare policy.
“[Our] margins have improved tremendously. The leverage has improved tremendously. And, obviously, the growth rates at which we want to operate should improve,” Sutaria told investors Tuesday. “And so when we put that picture together, our purpose is to make sure that… this is a highly investable business over the long-term.”
Tenet has outperformed analysts’ expectations for revenue each quarter this year and raised full-year outlook guidance just as often, causing one analyst from Jefferies to remark the company was earning a “beat and raise” reputation on the Street.
Still, hearing directly from Sutaria this week was significant given early market jitters around Trump’s reelection.
The day after the election, healthcare providers’ stock prices — including Tenet’s — fell as investors worried about the possibility of cuts to the Medicaid program and an end to enhanced federal subsidies related to the Affordable Care Act.
Though Tenet’s stock has since rebounded, questions remain about how Trump’s plans might impact provider profitability.
While campaigning, Trump vowed to protect seniors and swore to keep Medicare intact. However, the president-elect offered few specifics about his plans for the Medicaid program or the Obama-era ACA.
Trump’s silence on Medicaid troubled some analysts. They believe it is a sign Trump may pursue cuts to the Medicaid program, which covered nearly 80 million Americans as of July. Republican playbooks, including the Project 2025 blueprint — which Trump denies being associated with — have also called for significant reforms to Medicaid.
Federal subsidies for Americans making up to 400% of the poverty line are also set to expire at the end of the year absent intervention from lawmakers. Should the new administration allow the subsidies to expire, 20.1 million Americans who purchased health insurance through the ACA marketplace this year with enhanced subsidies could go without coverage, according to research from the Congressional Budget Office.
Yet, Sutaria believes the ACA marketplace is likely to remain in place — if only for political reasons.
“If you start to look at who these people are and the states they’re in, this is an important part of the electorate for the administration and many of the people in Congress that just won,” Sutaria said.
Sutaria noted that Americans in Texas, Florida, Georgia and both Carolinas account for roughly 50% of enrollment in the ACA public exchange.
The executive acknowledged there had been murmurs that Trump could cut federal healthcare spending to fund tax cuts. “But I think fundamentally, the importance of this coverage mechanism for people at those levels of federal poverty has established itself without an individual mandate in a pretty important way,” he said.
Sutaria similarly categorized state supplemental Medicaid payment programs, which have boosted Tenet’s revenues in recent quarters, as “very durable.”
The CMS finalized a rule in April that allowed states to cap the payments at the commercial insurance rate. Some investors were concerned the Trump administration might roll back that policy. However, multiple for-profit healthcare providers threw cold water on that notion during earnings calls this summer, stating the programs were popular even in Republican states.
Kevin Hammons, CFO of Community Health Systems, echoed the sentiment at a conference session later in the day.
“I’d point out they survived President Trump’s last administration, right?” Hammons said. “There has been bipartisan support for the supplemental programs.”
However, the Federal Trade Commission’s appetite for healthcare mergers and acquisitions is likely to be different under Trump than President Joe Biden, according to Sutaria and several UBS panel moderators.
Under the Biden administration and FTC Commissioner Lina Khan, healthcare consolidation, particularly hospital deals, faced significant scrutiny. Khan’s team blocked several large deals in the name of preserving competition, including a proposed sale of a Tenet hospital to John Muir Health last December.
“I think, largely speaking, the FTC and the antitrust environment will probably change and be more favorable for business in the coming four years,” Sutaria said.
The executive noted this change would likely have less of an impact on the ambulatory care side of Tenet’s business — which is the main focus of Tenet’s growth initiatives — because ambulatory care is less concentrated. Players include ambulatory surgery centers, hospitals and doctors offices. Mergers, he said, tend to pose lower threats to competition. “While we’re a small fraction of ASCs, we’re in a much smaller fraction of medical loss ratio, if you want to look at it that way, in terms of where the expenditures go.”
However, “on the acute care side … there are probably opportunities that would get less scrutiny going forward,” Sutaria said.
