Community Health Systems, Franklin, Tenn., said that increases in bad-debt expense in the fourth quarter and for all of 2009 offset much of the cost savings the company realized on labor, supplies and other operating expenses.
Bad-debt weighs on Community's results
For the fourth quarter, Community reported net income of $65.1 million, up 8.7% from the year-ago quarter. Revenue increased 11.1%, to $3.09 billion. For 2009, Community recorded net income of $243.2 million, up 11.4% from 2008. Revenue for the full year increased 10.9%, to $12.11 billion.
In 2009’s fourth quarter, the total cost of uncompensated care—bad debt, charity care and self-pay discounts—was 19.2% of the sum of net revenue, charity care and discounts; that figure was up 1.5 percentage points from the year-ago quarter. For the full year, uncompensated care was 18.9% of adjusted net revenue vs. 17.5% in 2008. For 2010, Community said it expects bad-debt expense to be 12.4% to 12.8% of operating revenue; it was 12.1% in 2009 and 11.2% in 2008.
Wayne Smith, president, chairman and CEO of Community, said there are many good acquisition opportunities, but the competition for them will intensify. These competitors include both for-profit companies and stronger not-for-profit systems that are rebounding, Smith said.
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