By Mrinalika Roy and Leroy Leo
(Reuters) -HCA Healthcare Inc on Friday cautioned higher labor costs that tarnished strong third quarter profits could linger for longer as the hospital operator battles a staff crunch, sending the company's shares down.
A nationwide shortage of healthcare workers amid fatigue from a prolonged COVID-19 pandemic has forced hospitals to shell out more to hire and retain nurses and other staff amid a jump in patient volumes driven by the Delta variant surge.
Chief Financial Officer William Rutherford said this quarter's performance was impacted by the need to retain and hire the labor in any way to support the number of COVID-19 patients in their hospitals.
HCA, the largest for-profit hospital operator in the United States, said expenses incurred on staff salaries and benefits rose 16.4%, or nearly a billion dollars, to $7.09 billion in the quarter.
"We used premium pay where we needed to. We used different levels of shift bonuses and overtime where we needed to," CEO Samuel Hazen said on a conference call.
The company said the labor environment would continue to drive up costs, but expects some respite as infections decline.
Despite the labor pressures, HCA reported a rise in profit driven by higher volumes of patients requiring costlier treatments due to the Delta variant as well as the sale of four of its hospitals in Georgia.
The higher patient numbers prompted HCA to raise its earnings forecast to a range of $17.20 to $17.80 per diluted share this year, from a prior forecast of $16.30-$17.10 per share.
Jefferies analyst Brian Tanquilut said some people may be wondering why the implied guidance for the fourth quarter is fairly conservative.
"But it was very clear that there's ample conservatism they've baked into that guidance," Tanquilut said.
The company's shares were down 2.7% at $252.90.
(Reporting by Mrinalika Roy and Leroy Leo in Bengaluru; Editing by Arpan Varghese)