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February 22, 2008 12:00 AM

CHS says Justice Dept. alleges $27.5 million in improper claims

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    Community Health Systems, Franklin, Tenn., said the U.S. Justice Department has now put a price tag on its allegation that three of the company’s hospitals submitted improper claims to a New Mexico program for indigent care: $27.5 million. The government alleges that the improper claims caused the state to submit false claims to the federal government, according to Community’s previous disclosure of the investigation. The company still maintains that it did not submit any false claims and continues to discuss the case with the government, said Wayne Smith, chairman, president and chief executive officer of Community, during an earnings conference call.

    In Community’s first full quarter of results since it completed its acquisition of Triad Hospitals in July 2007, the company reported a loss of $88.3 million for the quarter, on revenue of $2.53 billion. For the fourth quarter of 2006, Community reported a profit of $53.6 million on $1.1 billion in revenue. A review of the differences in accounting procedures between Community and Triad resulted in changes implemented in the fourth quarter, said Larry Cash, executive vice president and chief financial officer. Those changes reduced revenue by $96.3 million and increased bad-debt expense by $70.1 million, according to Community.

    The company also announced that it sold its operating interest in Beacon Hospital, Dublin, Ireland, and some related assets. Community acquired the Dublin hospital in the $6.97 billion Triad deal. Community expects to complete its sale of nine hospitals to Capella Healthcare, Franklin, by the end of the first quarter, Smith said. Completing the deal would reduce the company’s hospital portfolio to 116 hospitals. -- by Vince Galloro

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