Healthcare Business News

Capella posts smaller net loss; reform-law boost noted

By Beth Kutscher
Posted: August 6, 2014 - 2:45 pm ET

Capella Healthcare, a Franklin, Tenn.-based investor-owned hospital chain, reported a smaller year-over-year net loss in the second quarter, as volume and revenue per admission both increased. Like its peers, the company benefited from healthcare reform.

In total, the group reported a $5.4 million net loss (PDF) on revenue of $192.1 million. By comparison, it saw a $6.5 million net loss on $179.7 million in the second quarter of 2013.

Admissions decreased 0.5%, but increased 0.5% when adjusted for outpatient activity. However, Capella said revenue per adjusted admission was 6.3% higher.

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The 6.9% increase in revenue came from the 11.6% growth in outpatient activity—primarily from cardiovascular services and emergency department visits—and a significant increase in patient acuity, said Capella's CEO Michael A. Wiechart, on an earnings call.

Three of the company's six states expanded Medicaid. Capella saw a 51% decline in self-pay revenue in the second quarter compared to the year-ago period, and self-pay admissions declined 44%. Medicaid admissions, meanwhile, increased 24%.

Self-pay admissions accounted for 3.6% of the total in the second quarter, compared with 6.4% in the year-ago period, according to Capella's Chief Financial Officer Denise Warren. About 90% of the decline was in the three Medicaid expansion states, she said.

The company also recruited 28 physicians, 54% of whom are primary-care providers, Wiechart said, and had 160 employed physicians as of June 30.

The private equity-backed company also completed a recapitalization of its equity structure that lowered its debt burden. Capella has been under new leadership since December when Wiechart replaced founder Dan Slipkovich at the helm.

Follow Beth Kutscher on Twitter: @MHbkutscher

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