Vanguard Health Systems, Nashville, said its profits for the fourth quarter ended June 30 were cut in half compared to the year-ago quarter, largely because of a change in its malpractice insurance policy. The company said it took a non-cash charge of $5.7 million in the fourth quarter to boost the company's reserves for general and professional liability to $10 million to reflect its growth.
Privately held Vanguard earned $1.95 million for the quarter, compared to $4.6 million a year ago. Revenue was up 30.4% to $244.2 million. The year-earlier period also benefited from the company's ability to offset present tax liabilities with losses from previous years. For the year ended June 30, Vanguard earned $6.8 million, down 33% from fiscal 2001's $10.2 million in profits. In addition to the fourth-quarter charge and the increased tax payments, the fiscal 2002 results also included an operations expense of $6.6 million in one-time costs for early payment of debt. For the eight hospitals Vanguard owned and operated in both fourth quarters and both fiscal years, patient days fell 1.7% and 0.6%, respectively.
During a conference call, the company said the declines came as money-losing skilled-nursing units were closed and converted to acute-care use and as Vanguard renegotiated managed-care contracts. Vanguard owns and operates 10 hospitals in three states. --Vince Galloro