Community Psychiatric Centers continues to shrink its psychiatric operations in Texas, where the market apparently hasn't rebounded from the scandals of the past two years.
The Laguna Hills, Calif.-based company said it will discontinue psychiatric operations at three of its five Texas psychiatric hospitals, at a cost of $6.2 million. CPC's Texas psychiatric hospitals lost $1.7 million in the first quarter ended Feb. 28, the company said last week.
"An onerous regulatory environment now makes it very difficult and costly to provide inpatient psychiatric hospitalization in the state," said Richard Conte, CPC chairman and chief executive officer.
In Fort Worth, 130-bed CPC Oak Bend Hospital will be converted to a Transitional Hospitals Corp. facility. THC is a CPC subsidiary that operates 11 long-term hospitals for medically complex patients.
In addition, CPC Cypress Point Hospital, which had partially converted to THC operations, will now totally be renovated for that purpose. CPC Afton Oaks Hospital in San Antonio will close its acute-care psychiatric operations, but it will keep its residential treatment center open. The treatment center provides long-term psychiatric care.
CPC will continue to operate psychiatric hospitals in Arlington and Austin.
CPC took the $6.2 million charge on its earnings for the first quarter. However, the charge was offset by a $7.1 million credit from a previous restructuring charge. In 1993, CPC took a $55 million restructuring charge on its psychiatric operations, and that charge proved to be more than the company needed, explained Suzanne Hovdey, a company spokeswoman.
In all, CPC's psychiatric operations made money, but those profits were nearly wiped out by start-up costs at THC facilities. CPC opened eight THC facilities during the quarter. For the first six months, those facilities receive prospective payments, rather than cost reimbursement from Medicare, making start-up costs substantially higher.
CPC reported net income of $625,000, or 1 cent per share, for the first quarter, compared with a net loss of $37.9 million, or 88 cents per share, in the year-ago period. Net revenues grew 10% to $92.2 million. The 1993 first-quarter loss included a $55 million writedown stemming from the company's psychiatric operations.