Community Health Systems' earnings preview—which showed larger-than-expected drops in patient volume and net income—may set the stage for a difficult quarter going into earnings season for publicly traded hospital operators. Those difficulties may be heightened by ongoing federal investigations into Community and another large hospital operator, Health Management Associates.
Franklin, Tenn.-based Community on July 18 braced investors for earnings results that are expected to show a 57.2% decline in net income, which it attributed to weak patient volume, higher-than-expected bad debt and an adverse payer mix.
It also said the U.S. Justice Department had handed down an additional subpoena as well as a request to interview two high-ranking executives as part of its two-year investigation into the company's admissions practices.
The admissions numbers—a 5.7% drop in same-facility admissions and a 2.6% decline in adjusted same-facility admissions, a number that includes outpatient activity—came just days after HCA, the country's largest hospital chain, surprised Wall Street with an upbeat earnings preview that surpassed expectations for volume and net income.