Losses on investments have hurt the bottom lines of many not-for-profit hospitals, and now the same sort of losses are hitting a unit of the country's largest investor-owned hospital operator, HCA, Nashville.
HCA reported a nearly 27% drop in profits for the third quarter ended Sept. 30 compared with a year ago, thanks to a $100 million noncash charge for the declining value of its insurance subsidiary's stock portfolio. HCA said it earned net income of $200 million, or 38 cents per share, for the quarter ended Sept. 30, compared with $273 million, or 51 cents per share, for the 2001 third quarter. Revenue was up 11% to $4.9 billion.
HCA said its operations benefited from increased volume at its hospitals, including a 3.2% rise in equivalent admissions, and better reimbursement from private health plans. The company also saw volume growth at its 78 ambulatory surgery centers of better than 5% for the quarter and nine months compared with the year-ago periods, said Richard Bracken, president and COO.
More generally, Bracken told stock analysts during a conference call, HCA's volume growth can be attributed to the company's investments over the past several years in expanding and upgrading the 181 hospitals it owns or operates. Those investments allow the hospitals to take advantage of the growing populations in most of HCA's suburban markets, Bracken said.
Excluding extraordinary items such as the investment write-down, a sale of facilities and the cost of a government investigation, HCA said its earnings increased more than 40% to $319 million, or 60 cents per share, from $226 million, or 43 cents per share, in the year-ago quarter.
For the nine months ended Sept. 30, including all extraordinary items, HCA posted profits of $935 million, or $1.78 per share, compared with $897 million, or $1.66 per share, in the year-ago period -- a 4.2% increase. Revenue for the nine-month period was up 9.6% to $14.7 billion.