Beauty is in the eye of the beholder. Or is it the analyst? The consultant, perhaps?
The net earnings of Columbia/HCA Healthcare Corp., the nation's largest hospital chain, jumped 51% in the third quarter ended Sept. 30. Operational consultants applaud the increase, but analysts wanted more.
"I know how long it takes to turn around 200 institutions," said Rufus Harris, a healthcare consultant with Westmont, Ill.-based TriBrook/AM&G. "Analysts would like to (have seen an increase) last quarter."
TriBrook has performed consulting work for Columbia in the past.
Columbia last week announced its best earnings performance since the federal government last summer opened its nationwide probe into the company's billing practices: Net income increased 51% to $146 million, or 22 cents per share, in the third quarter, compared with net income of $97 million, or 16 cents per share, in the year-ago quarter. The Nashville-based company said revenues were flat at $4.6 billion.
For the nine-month period ended Sept. 30, net income dropped 55% to $421 million, or 65 cents per share, from $932 million, or $1.40 per share, in the year-ago period. Revenues dropped 1% to nearly $14.3 billion.
As part of its restructuring plan, Columbia sold 17 hospitals, 34 surgery centers and other noncore assets for about $1.5 billion, resulting in a pre-tax gain of $537 million for the third quarter. At the end of the quarter, Columbia said it owned and operated 318 hospitals and 123 surgery centers.
Columbia's third-quarter results were a disappointment to many analysts, who expected the company's operating earnings per share to reach 24 cents, according to a survey conducted by Boston-based financial research company First Call Corp. Columbia reported operating earnings of 20 cents per share.
Columbia's stock price closed at $19 on Oct. 28, the day third-quarter results were announced, up 81 cents from the previous day's close.
Third-quarter figures showed admissions at Columbia's core assets-the 232 hospitals it plans to keep-rose 1.4%. Meanwhile, admissions at 22 facilities either sold or on the block dropped 5.5%. Admissions at the 43 Pacific Group hospitals dropped 0.4%, while admissions at the 21-hospital America Group dropped 1.2%.
The company took a $13 million charge relating to the federal investigation and operational restructuring, but that was a 66% drop from the $38 million charge for similar reasons in the year-ago quarter.