HCA, Nashville, said it is ending development of new accounts receivable software and will take a pretax charge of $110 million to $130 million in the second quarter as a result. The company said it expects the move will help it avoid $200 million to $225 million in costs over the next five years. The decision was not related to lower patient volumes reported for the first quarter or the lowered earnings projections announced last month, spokesman Jeffrey Prescott said. HCA, which began developing its "millennium accounts receivable system" in early 2002, was seeing development costs rise even as it was gaining the software's promised benefits through improvements in its collection processes, Prescott said. HCA said it had spent $123 million on the project as of April 30.
HCA also said shareholders soundly rejected a proposal calling for Chairman and CEO Jack Bovender Jr. and the board of directors to discuss ways to reduce Bovender's pay. In 2002, Bovender received a salary of $1.5 million, options to buy 225,000 shares of stock and performance-related compensation worth $1.7 million, according to HCA's proxy filing with the Securities and Exchange Commission. For 2003, the salary remains the same. Bovender received a lump-sum payment of $75,625 in lieu of a raise. He also will receive options to buy 300,000 shares, but any performance-related compensation will be determined after the year is completed. Bovender may choose, as he did in 2002, to receive some of his salary as restricted stock grants. -- by Vince Galloro