Columbia/HCA Healthcare Corp. continues to impress Wall Street with its 16% earnings growth and told industry analysts it isn't concerned about increased scrutiny by state regulators and lawmakers of its future acquisitions.
Richard Scott, Columbia chairman and chief executive officer, told analysts during a conference call last week that the Nashville, Tenn.-based company viewed its encounters with attorneys general and state and federal lawmakers as a "positive" way to explain the company's strategy. Some analysts have been bracing their investors for increased national media scrutiny and investigations of Columbia's deals (Nov. 4, p. 3).
"If we do the right thing, we win," Scott told analysts. "They (investigators) feel very good about what we're doing, otherwise we wouldn't be (completing as many acquisitions). We have to give people a lot more information."
The 347-hospital chain reported net income increased 16% to $311 million, or 46 cents per share, for the third quarter ended Sept. 30. That compares with net income of $267 million, or 39 cents per share, in the year-ago quarter. Revenues rose 12% to $4.9 billion.
In the first nine months of this year, Columbia completed acquisitions or joint ventures with 28 hospitals that generate more than $1 billion in annual revenues (See related story, this page).
In that same period, Columbia reported an 80% increase in net income to $1.1 billion, or $1.61 per share, compared with $607 million, or 90 cents per share, in the year-ago period. Revenues rose 13% to $14.8 billion.
The company said the net income increase is inflated because of one-time costs sustained in 1995 for merging new hospital acquisitions, including Healthtrust, into the Columbia system, which operates facilities in 37 states.
Wall Street is particularly impressed with Columbia's ability to far outpace the industry in inpatient admissions growth. Total inpatient admissions grew 11% in the third quarter. "Same-store" admissions, or admissions at hospitals that Columbia has owned for at least a year, were up about 4%.
Meanwhile, hospitals nationally saw admissions decline about 1% through the end of July, Columbia said, citing American Hospital Association statistics for the first six months.
AHA statistics for inpatient hospital admissions weren't available for the third quarter, but it is widely accepted by industry observers that inpatient admissions are dropping nationwide.
Columbia's same-store revenues were up 11%. "Same-store revenues drive the earnings of the company," said Victor Campbell, Columbia's senior vice president of investor relations.