Increasing self-pay will hamper earnings growth of for-profit hospital companies next year, but some firms have not factored higher bad debt into their earnings projections, according to a report by Susquehanna Financial Group, a unit of Susquehanna International Group, Bala Cynwyd, Pa. Bad debt is expected to increase because employers are shifting more medical costs to workers. Among publicly held hospital companies, Triad Hospitals, Plano, Texas, has been most conservative, raising its bad-debt projection to 10% of patient revenue from 8% earlier this year, according to the report. In contrast, Universal Health Services, King of Prussia, Pa., recently lowered its bad-debt projection to 8.5% of patient revenue from 9% in 2001. The company is the most likely to raise its bad-debt expense in 2004, the report said. "It is difficult to determine exactly what fraction of a company's revenue will end up as bad-debt expense. However, it is clear that this fraction is likely going to be greater in the future," analyst David Haushalter said. -- by Mary Chris Jaklevic
Bad-debt expenses likely to rise in 2004: report
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