The rising cost to HCA of treating uninsured patients is prompting the hospital giant to test a program that would screen more nonemergency patients out of its emergency rooms and funnel them to less-costly options such as a clinic or physician's office.
HCA also said it will test changes to the way it initially collects information from patients so billing questions can be dealt with upfront.
These incremental changes were designed with the "patient-dumping" law, also known as the Emergency Medical Treatment and Active Labor Act, firmly in mind, HCA President Richard Bracken said last week. "We are obviously very, very sensitive to (patient-dumping) regulations and don't want to-in any way, shape or form-run afoul of those," Bracken told analysts and investors last week during a conference call. "This just sets up another screening by medical personnel before someone gets to the back of the emergency room."
The Nashville-based company was one of five investor-owned chains to report earnings last week. Four reported bad-debt expense that significantly exceeded year-ago levels, compressing their profit margins.
HCA said the surge of uninsured patients that it treated was concentrated in its two biggest states, Florida and Texas. Those two states combined represent 52% of the com-pany's admissions overall but nearly two-thirds of the uninsured admissions, HCA said.
While uninsured admissions are small relative to the company's total, HCA said, the increase those admissions caused in its bad-debt expense slashed profits by one-quarter for the three months ended March 31. HCA said it earned $345 million, or 69 cents per share, for the first quarter, compared with $469 million, or 90 cents per share, in 2003's first quarter. Revenue was up 12.6% to $5.9 billion. HCA owns or operates 191 hospitals, including seven hospitals that are part of 50-50 joint ventures.
Health Management Associates, Naples, Fla., was the only company among the five to keep its bad-debt expense at a stable, manageable level. The margin for its second fiscal quarter still fell to 10.9% from 12.1% in the year-ago quarter, as salary and benefit expenses grew to 39% of revenue, from 38% a year ago.
HMA earned $90.5 million, or 37 cents per share, for the quarter, compared with $78.1 million, or 31 cents per share, in the year-earlier period. Revenue was up nearly 30% to $833.9 million. HMA, which added five hospitals in November 2003, owns or operates 52 hospitals in 16 states.
Triad Hospitals, Plano, Texas, reported a bad-debt expense of 10.2% of revenue for the quarter, compared with 7.9% for the first quarter of 2003. While much higher than a year ago, Triad said the expense was lower than in the third and fourth quarters of 2003.
But Triad executives urged caution during a conference call last week. "One quarter does not a trend make, and we're just not ready to declare, 'Victory, mission accomplished' just yet," said Burke Whitman, Triad's executive vice president and chief financial officer. However, "We see no reason for it to get worse," he added later. Triad said that largely because of asset sales, its earnings doubled for the first quarter to $97.8 million, or $1.29 per share, from a year ago. Revenue climbed 23.2% to $1.1 billion. Earnings from continuing operations rose slightly-to 66 cents per share from 63 cents per share. Triad owns or operates 54 hospitals.
Universal Health Services, King of Prussia, Pa., reported lower profits for the first quarter, in line with its profit warning last month. UHS said it earned $46.2 million, or 74 cents per share, for the quarter, down 12.5% from a year ago. Revenue was up 17% to more than $1 billion. The company's acute-care volumes showed the continued hit it is taking in the South Carolina and Texas markets, as adjusted admissions were up only 0.5%. Universal's behavioral health hospitals posted a 10.1% increase in adjusted admissions. Universal owns or operates 28 acute-care and 39 behavioral health hospitals.
While bad-debt expense is the hot topic now, a year ago it was patient volume. With the exception of Universal, the chains reported good results on that front. On a same-facility basis, HCA recorded volume increases of 2.5% in equivalent admissions and 2.3% in emergency room visits. At HMA, same-hospital adjusted admissions increased 4.1% for the quarter. Triad said adjusted admissions grew 6.8% at facilities it has operated for at least a year, including 6% growth in same-facility surgeries, but the company said it expects volume growth to moderate over the rest of 2004.
At Community Health Systems, Brentwood, Tenn., adjusted admissions climbed 2.1% at the 69 hospitals Community operated during both quarters. Community said profits for the quarter increased 21% to $40.7 million, or 39 cents per share, on rising admissions and acquisitions. The company earned $33.5 million, or 33 cents per share, in the year-ago quarter. Revenue in the 2004 first quarter rose 25% to $822.4 million. The company owns or operates 72 hospitals.