Quorum Health Group is beginning to feel the effects of being in limbo.
The hospital company suffered a slight drop in hospital admissions for its second quarter ended Dec. 31, and its hospitals are experiencing heightened pressure from competing facilities for employees, patients and physicians, after Quorum's definitive agreement in October 2000 to be bought by Triad Hospitals for $2.4 billion.
Quorum is working hard to turn itself over to Triad in good condition, Quorum President and Chief Executive Officer James Dalton said in a conference call late last week. "Having said that," he added, "We must also confess that operating in this kind of environment for a protracted period of time is challenging."
The company, which owns or leases 21 hospitals and manages 210, also is having trouble holding onto employees at its corporate headquarters in Brentwood, Tenn., home to many other healthcare companies eager to recruit Quorum employees, Dalton said.
And in at least one case, it couldn't hold on to a hospital. Williamsburg County, S.C., will buy out Quorum's lease of the county's 47-bed Carolinas Hospital System-Kingstree (S.C.). Quorum is about halfway through its 10-year, $1 million lease. After Quorum officials shared their intention to reduce some hospital services, the county decided to buy back the lease to maintain a full-service acute-care hospital, a Quorum spokeswoman said. Financial details are being negotiated.
Dalton said he expects the sale to Triad to be completed in the first half of this year.
Quorum reported a 13.4% decline in second-quarter net income to $10.9 million, or 14 cents per share, from $12.6 million, or 17 cents per share, for the year-ago quarter. Net operating revenue rose 5.9% to $458.6 million.
The company probably will miss its end-of-January target for completing a $77.5 million settlement with the federal government over alleged Medicare cost-reporting fraud. Quorum already has paid the government about $18 million to resolve allegedly improper home health payments at an Alabama hospital.
Quorum experienced disappointing volume trends in December, Dalton said. For the quarter ended Dec. 31, 2000, same-hospital admissions decreased 1%, while adjusted admissions, which take into account outpatient visits, increased 1.4%. Quorum officials attributed the volume figures to declines in respiratory-related admissions.