Health Management Associates has provided hospital operators with two examples of the law of unintended consequences.
The Naples, Fla., company said last week that its efforts to reduce its self-pay patient volume inadvertently scared off many insured patients, too. This unintended consequence was a big driver of a steep volume decline in the second quarter, HMA said. Comparing the second quarter with 2007s second quarter, HMA reported a 3.8% decline in admissions, a 1.5% decline in adjusted admissions and a 0.8% decline in surgeries.
The other large driver of the volume decline was the companys sale of a 27% stake in its hospitals in North and South Carolina to Novant Health, Winston-Salem, N.C., HMA said. The confidentiality required to complete the deal kept HMA from discussing the change with physicians, including 110 physicians who were employed by HMA hospitals in the Carolinas, said Kelly Curry, HMAs chief operating officer. Those physicians are now employed by Novants physician practice, and with their adjustment coming along, the volume should return, Curry said.
HMA also said it was hurt by the release of some quality data that is more than a year old. Initiatives that began in January have already brought improvements in quality and patient-satisfaction scores, so HMA released some of those results two days after the financial results at the urging of stock analysts.
David Bachman, a senior research analyst covering healthcare facilities for Longbow Research, said all of these factors have hurt the reputation of HMAs hospitals. Theyre trying so hard to limit uninsured exposure and bad debt that they got really strict with patients, Bachman said. Those perceptions out there are so important. How youre perceived in the community by patients, by physiciansit sounds cliche, but it really is a relationship business.
HMA also said that economic conditions in its markets dragged down volume, but the combined effects of the other factors had a bigger impact.
HMAs results contrasted with the other five investor-owned companies that have reported second-quarter results. Four have reported patient volume increases, including Tenet Healthcare Corp., Dallas, last week, while LifePoint Hospitals, Brentwood, Tenn., recorded a doubling of profits.
Tenet notched its best quarterly volume gain since the first quarter of 2004. Excluding facilities that it plans to divest, Tenet said that its same-hospital admissions increased 2.2%, comparing the second quarters of 2007 and 2008. Like Nashville-based HCA, Tenet reported a decline in commercial managed-care admissions1.7% for core hospitals in Tenets casebut the company said that some decline was in obstetrics, a service that it has scaled back at many hospitals because it is not profitable. Weakness in the companys Southeast region, which is relatively high in commercial managed-care payers, also had an effect, Tenet said. In eight service lines that Tenet has emphasized, commercial managed-care admissions increased 1.9%.