Community Health Systems, Brentwood, Tenn., said greater self-pay volume and lower collection rates on self-pay revenue hammered its profits, as the company joined HCA and Health Management Associates in reporting higher bad-debt expense for the third quarter. Community said the self-pay volume and collection trends forced it to change its accounting for bad debt for the first time since the company went public in 2000. The accounting change led to a $65 million pretax charge. Community said profits were down 80% to $8.2 million, compared with $42.9 million in the year-ago quarter. Revenue climbed 20.9% to $1.12 billion. Unlike HCA and HMA, Community reported growth in same-facility patient volume, with admissions increasing 2.6% and adjusted admissions rising 0.7%.
For the nine months ended Sept. 30, Community posted profits of $114.6 million, down 4% from the year-ago quarter. Revenue was up 16.5% to $3.21 billion. During a conference call, Community executives said the companys self-pay volume was flat in 2004 and 2005 but started to rise in 2006. Unlike chains that operate in more urban areas, Community said its increase is overwhelmingly driven by uninsured patients, rather than higher copayments and deductibles being expected from insured patients. Community owns or operates 76 hospitals in 22 states. -- by Vince Galloro