HCA Healthcare’s acquisition of Valesco was initially a financial drag. Now, executives say the physician platform is stabilizing costs, strengthening payer negotiations and giving the company greater control over services central to hospital operations.
Nashville, Tenn.-based HCA fully acquired Valesco, its former joint venture with Envision Healthcare-affiliated physician practice management company EmCare, in June 2024. HCA had increased its ownership in the venture from 50% to 90% in April 2023 before completing the acquisition.
The deal brought more of HCA’s hospital-based emergency medicine and hospitalist services under its control. During the company’s second-quarter earnings call, executives framed that control as both a cost-management tool and a strategic advantage.
“With our acquisition of Valesco, we have gained control of many of our hospitals’ hospital-based services,” CEO Sam Hazen said.
HCA has used that control to integrate the services into its commercial payer contracts, improving reimbursement and reducing its exposure to out-of-network billing disputes, according to Mr. Hazen.
The strategy reflects a broader shift in how HCA views hospital-based physicians. Rather than treating emergency medicine, hospitalist and other physician groups primarily as contracted expenses, the company aims to make them part of an integrated hospital network that supports operations, contracting and growth.
From financial drag to strategic asset
Valesco’s performance weighed on HCA after the company expanded its ownership stake. In October 2023, Mr. Hazen said higher staffing costs and lower-than-expected revenue were contributing to losses of about $50 million per quarter. HCA subsequently moved to integrate the platform and improve its operations.
On the second-quarter call, HCA CFO Mike Marks said the company has stabilized the emergency medicine and hospitalist portions of its professional fee spending.
“We’re in much better shape there as it relates to the cost side,” Mr. Marks said. “It’s also a great asset for the company, and we believe will drive strategic value in our facilities.”
Professional fees remain one of HCA’s fastest-growing expense categories. Same-facility professional fees rose about 8.5% year over year during the second quarter and nearly 10% during the first half of 2026.
The cost pressure is no longer concentrated in emergency medicine and hospitalist services, with anesthesia and radiology now the primary sources of elevated professional fee growth, according to Mr. Marks.
HCA is applying a similar operating model to those specialties, focusing on “people, process and technology,” he said. Management teams in HCA’s markets and its Nashville-based clinical services group are working to stabilize both areas.
Although professional fee growth remains above general inflation, Mr. Marks said HCA is in a better position than it was during the previous two years.
More control over payer contracting
Valesco also supports HCA’s strategy of keeping hospitals and their physician services in network.
Mr. Hazen said HCA is an in-network provider across nearly all its facilities and participates in about 80% to 85% of available exchange contracts. Integrating Valesco’s hospital-based services into HCA’s payer agreements has helped align reimbursement with the cost of operating those services.
That approach also limits HCA’s reliance on the federal independent dispute resolution process established under the No Surprises Act.
HCA has relatively few claims entering the process, according to Mr. Hazen. Most involve exchange products or a small number of commercial contracts in which the company does not participate.
“We’re hopeful in many of those instances we can get the contracts that we need, so we don’t have to use that process,” he said.
Control of hospital-based physician services gives HCA another lever in those negotiations. Instead of a hospital participating in a payer network while an independently managed emergency medicine or anesthesia group remains out of network, HCA can work to align the facility and physician components under the same contracts.
A platform for hospital operations and growth
HCA’s Valesco strategy extends beyond reducing physician subsidies. Hospital-based physicians affect patient flow, emergency department capacity, inpatient operations and the availability of specialized services.
Bringing those groups closer to HCA’s hospitals could give the hospital operator more influence over staffing, scheduling, clinical integration and operational performance. That coordination is especially important as HCA adds capacity across its inpatient and outpatient networks.
The company has approved more than $7 billion in capital projects expected to come online during the next three years. The investments include 1,000 to 1,200 inpatient beds, new hospitals and hundreds of outpatient facilities.
HCA expects demand to grow between 2% and 3% over the longer term, supported by population growth in markets including Florida, Texas, Utah, Nevada, South Carolina, Georgia and Tennessee.
As those networks expand, HCA will need physician coverage that can scale alongside new beds, emergency departments and outpatient sites. Valesco gives the company a platform through which it can manage part of that growth directly rather than relying entirely on outside staffing companies.
The model does not eliminate HCA’s physician cost pressures. Anesthesia and radiology remain challenges, and professional fees continue to rise faster than many of the company’s other expenses.
But HCA executives increasingly describe Valesco as more than a turnaround project. The company is betting that greater control of hospital-based physician services will create a more integrated network — one that improves reimbursement, limits out-of-network exposure, stabilizes costs and strengthens hospital operations.
For HCA, the competitive advantage comes not just from owning the physician group, but from connecting physician services more closely to the hospitals, payer contracts and markets they support.
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