Correction: Iasis did not spend 17.2% of revenue for the six months ended March 31 on medical malpractice claims. The expenditures were for medical claims filed by members of the company's Medicaid HMO in Arizona. Also, the company's results reflect a one-time charge of $8.9 million for debt-issuing costs. -- posted May 5, 4:30 p.m. CST
Iasis Healthcare Corp., Franklin, Tenn., said it had a small gain in profits for the quarter ended March 31 thanks to the sale of a shuttered Salt Lake City hospital. Iasis earned $11.9 million on $355.5 million in revenue in its fiscal 2004 second quarter, compared with net income of $10.9 million on $271.4 million in revenue in the year-ago quarter. However, Iasis' profit margin dropped to 3.3% in the fiscal 2004 quarter from 4% in the year-ago quarter. Adjusted admissions at the 14 hospitals Iasis operated in both quarters were up 0.3%. Iasis recorded a pretax gain of $3.6 million on the sale of Rocky Mountain Medical Center to the local school district. After losing millions of dollars reopening the hospital in April 2000, Iasis closed it in June 2001. For the six months ended March 31, Iasis earned $20.1 million on $673.6 million in revenue, a 3% margin. In the year-ago period, profits were $18.4 million on $526.2 million in revenue, a 3.5% margin. Adjusted admissions were up 1.1%.
Bad-debt expense rose in both periods. For the quarter, bad debt equaled 9.1% of revenue, up from 7.4% in the fiscal 2003 quarter. For the six months, bad debt was 8.5% in the 2004 period and 7.6% in the 2003 period. Iasis was able to cut labor costs relative to revenue, however, to just above 31% in the quarter and six-month period, compared with nearly 35% in the year-ago periods. The company also reduced supply expense as a percentage of revenue, but the cost of malpractice lawsuits rose to 17.2% of revenue for the six months, compared with 11.8% in the 2003 period. Iasis owns or operates 15 hospitals, including one it acquired in February from Tenet Healthcare Corp. -- by Vince Galloro