Community Health Systems, Franklin, Tenn., offered more insight into how the company plans to change things at Triad Hospitals, which Community acquired last week for $6.8 billion in cash and debt. Wayne Smith, chairman, president and chief executive officer of Community, spoke of the opportunities at Triad and the changes needed to realize them during a conference call to discuss second-quarter earnings for both companies.
Community earned $53.8 million on revenue of $1.25 billion for the quarter, up slightly from $52.4 million in profits on revenue of $1.06 billion in the year-ago quarter. Community held the line on all costs except for bad debt, which rose to 11.9% of revenue, up a full percentage point over the year-ago quarter. Meanwhile, for Triad, formerly based in Plano, Texas, net income for the quarter was cut in half from the year-ago quarter, to $30.4 million on $1.49 billion in revenue.
Smith said that Community will not pursue two growth strategies that Triad used: developing brand-new hospitals and making acquisitions in which the original owner retains a stake. Community will walk away from some new hospital opportunities that are present in Hawaii and Ireland, Smith said. Community plans to expand another type of joint venture that Triad sought in physician-syndication deals, he said.
Meanwhile, Health Management Associates, Naples, Fla., reported sharply lower earnings thanks largely to much higher bad-debt expense. The company said its profits for the second quarter were $11.9 million, compared with profits of $77.3 million in the year-ago quarter. Revenue was up 10.3%, to $1.1 billion. HMA operates 59 hospitals in 15 states.-- by Vince Galloro
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