Tenet Healthcare Corp. released some hard numbers on all the bad news the company has been warning investors about, while Ardent Health Services released its first set of public numbers last week.
Tenet reported a loss of $308 million, or 66 cents per share, for the third quarter, compared with profits of $328 million, or 66 cents per share, in the year-ago quarter. Revenue fell 6.4% to $3.3 billion.
The story behind the loss begins with Medicare outlier payments, which are meant to mitigate the losses hospitals would otherwise take on the sickest Medicare patients under DRGs. Tenet recorded $16 million in revenue for the quarter from outlier payments, compared with $261 million in 2002's third quarter.
As it disclosed in October, Tenet also took a huge hit on bad debt, with provisions for doubtful accounts doubling, to $522 million or 15.8% of revenue, from the year-ago quarter. A sharp increase in self-pay patients was the main factor behind the dramatic rise in bad-debt provisions, Trevor Fetter, Tenet's president and chief executive officer, said in a news release.
The company is attacking the problem, but these measures "cannot be relied upon to eliminate the impact of this problem," Fetter said. Tenet also has a $50 million dispute with Blue Cross of California that increased bad debt. Last week, Tenet said an independent panel that reviewed the records of 23 heart patients at a Tenet hospital found their care was appropriate, contradicting the Blues plan's case review.
The company also added to its reserves for the possibility that it may have to make a $253 million payout to a former executive, John Bedrosian (Nov. 10, p. 14). California's 2nd District Court of Appeals awarded Bedrosian the money in a breach-of-contract case. Tenet's predecessor company, National Medical Enterprises, fired Bedrosian in 1993.
For the nine months ended Sept. 30, Tenet lost $523 million, or $1.12 per share, on revenue of $10.1 billion. Tenet owns and operates 106 hospitals, including five it has agreed to sell.
Nashville-based Ardent, meanwhile, made its first public report of quarterly results. The privately held company, which sold $225 million in publicly traded bonds in August, was compelled to publish results by a securities regulation governing companies with publicly traded debt. Ardent said it earned $2 million on $334.6 million in revenue for the third quarter, reversing a loss of $1.1 million on $103.2 million in revenue in the year-ago quarter. The revenue growth came largely from Ardent's acquisition of five hospitals and a health plan in the Albuquerque market last year.
For the nine months ended Sept. 30, Ardent earned $3.9 million on $978.8 million in revenue. Profits were down 22% from the year-ago period, when Ardent earned $5 million on $269.9 million in revenue. Ardent owns and operates seven acute-care hospitals and 21 psychiatric hospitals.
Also last week, privately held Iasis Healthcare Corp., Franklin, Tenn., said fourth-quarter profits were just one-third of what it earned in the year-ago quarter, despite strong admissions growth. Iasis said it earned $2 million on $283.2 million in revenue for its fourth quarter ended Sept. 30, compared with a $6.8 million profit on $244.7 million in revenue during the year-ago quarter. Expenses for medical claims, bad debt and other items all rose at a slightly faster rate than revenue, which climbed 15.7%.
For its fiscal year, Iasis saw profits drop by more than 25% to $20.6 million compared with $28.5 million in fiscal 2002. Revenue was up 14.6% to $1.1 billion. A $3.9 million loss on early retirement of debt and a $11.7 million charge to write down assets held for sale reduced profits. Admissions grew 7.4% and 7% for the quarter and fiscal year, respectively. Iasis owns or operates 14 hospitals.