After proclaiming 1996 the best year in its nearly 10-year history, Nashville-based Columbia/HCA Healthcare Corp. last week agreed with analysts' characterization of the company as no longer in the "bed derby."
But on the same day its executives staged that portrayal, Columbia filed suit against Lawrence County, Kan., for not letting it build a new 70-bed hospital there (See p. 6).
The nation's largest for-profit hospital chain, which completed 1996 with 343 hospitals, ended the fiscal year with $1.5 billion in net income, according to its annual and fourth-quarter earnings report released last week.
Richard Scott, Columbia's chairman and chief executive officer, said the company will still aggressively acquire hospitals but will be more focused on acquiring other properties to flesh out its provider networks and be more attractive to managed-care companies and other payers.
"We're becoming a comprehensive provider," Scott said during a conference call with analysts. "We're clearly focused on growing revenues and not wasting dollars."
Columbia reported a 17% rise in net income to $414 million, or 61 cents per share, in the fourth quarter ended Dec. 31. That compares with net income of $354 million, or 53 cents per share, in the year-ago quarter. Revenues grew 12% to $5.1 billion.
For the year, the company's net income rose 56% to $1.5 billion, or $2.22 per share, from $961 million, or $1.43 per share, in 1995. Revenues rose 13% to $19.9 billion.
The year-ago figures include one-time costs related to Columbia's 1995 merger with Healthtrust. Excluding the merger charges, the company's net income would have been $1.3 billion in 1995.
To support their claim that Columbia isn't just a hospital company anymore, executives pointed to a net gain of just five hospitals last year. The company completed acquisitions or joint ventures with 27 hospitals and built another facility in 1996. However, it also divested, terminated leases, consolidated, closed or merged 23 acute-care or psychiatric hospitals. Officials didn't name the facilities involved.
"Columbia isn't in the bed derby anymore," said John Hindelong, vice president at Donaldson, Lufkin & Jenrette, a New York investment banking firm.
Analysts said Columbia is successfully becoming less dependent on hospitals as a source of revenues. "They are clearly generating more and more revenue from other acquisitions like Value Health," Hindelong said. "Those types of acquisitions are another arrow in the quiver." Columbia is buying Value Health, an Avon, Conn.-based benefits management firm, for $1.3 billion.
Still, Columbia continues to tout its impressive growth in hospital revenues. At hospitals it has owned for at least one year, admissions were up 4.8% in the fourth quarter of 1996.
"It was our best quarter since the first quarter of 1995," said David Vandewater, Columbia's president and chief operating officer. "We're outpacing what's going on in this industry."