While they're known as for-profit hospital chains, profit figures tell only half of the earnings story, as the three chains that reported results last week showed.
Beyond the basics of net income and revenue, the two most-watched statistics are admissions and bad-debt expense. Universal Health Services, King of Prussia, Pa., said its profits rose despite reporting weaker figures for both of these statistics, but the numbers were expected by investors, said Nancy Weaver, a healthcare stock analyst with Stephens, an investment bank.
"I think investors really give these guys the benefit of the doubt because they have such a strong track record," Weaver said.
At the 25 acute-care hospitals the company has operated for at least 12 months, UHS said adjusted admissions were up 0.3% for the year and were down 1.4% for the quarter. At its 37 behavioral hospitals operated for at least 12 months, UHS said adjusted admissions were up 2.2% for the year and 4.5% for the quarter. The volume figures exclude the company's holdings in France. Weaver said UHS' behavioral health hospitals have taken advantage of a widespread shortage of psychiatric beds.
Weaver also noted that UHS showed the first sign that it is susceptible to rising bad-debt expense. The company said this expense was equal to 7.8% of revenue for the quarter, up from 6.9% of revenue in 2002's fourth quarter. The figure was up one-tenth of a percent, to 7.2% of revenue, for the year. HCA, Tenet Healthcare Corp. and Triad Hospitals all have reported bad debt equaling 10% or more of revenue.
UHS owns or operates 29 acute-care and 39 behavioral health hospitals in North America.
Two rural hospital chains also reported their results for the fourth quarter and year ended Dec. 31, 2003. LifePoint Hospitals, Brentwood, Tenn., reported higher profits for the year and the quarter. For the quarter, same-hospital equivalent admissions rose 4.6% and outpatient surgeries rose 2.6%. The fourth quarter's volume improvements largely accounted for the company's 1% increase in equivalent admissions for the year. LifePoint owns or operates 29 hospitals, including 23 hospitals it has operated for at least 12 months.
The chain, a spinoff of HCA, also reported bad-debt expense of 9.7% of revenue for the quarter and 9% for all of 2003, up from 8.1% and 7.4% in the year-ago quarter and in 2002.
Province Healthcare Co., Brentwood, said its profits fell by more than 40% in the fourth quarter thanks to a $9 million charge the company took related to the sale of 65-bed Glades General Hospital, Belle Glade, Fla., to the Health Care District of Palm Beach County for $2.3 million; the sale is expected to be completed by June 30. Province bought the hospital from the district in 1999 for $15.1 million. Province said same-hospital adjusted admissions grew 3.1% for the year and 8.7% for the quarter, compared with the year-ago periods.