CHS reports drop in third-quarter net income

Community Health Systems, Franklin, Tenn., reported another steep decline in net income in the third quarter as the rural hospital operator continued to struggle with falling patient volumes.

The chain said net income from continuing operations decreased to $21.6 million, compared with $58.8 million during the same period last year, for a decrease of 63.3%. Net operating revenue increased 0.2% to $3.2 billion.

The company also said it put aside $98 million in anticipation of a yet-to-be-finalized settlement with the U.S. Department of Justice over investigations into its short stay admissions practices from 2005 to 2010, as well as a separate investigation into practices at the chain's Laredo Medical Center in Texas. The funds are expected to cover only the Justice Department investigations, and not claims arising from state Medicaid or Tricare programs, Community said in a news release.

Those reserves, as well as expenses related to its pending deal to acquire Health Management Associates, contributed to the decline in net income.

But Community also said same-hospital inpatient admissions declined 6.8% year over year, and admissions adjusted for outpatient activity declined 3.9%.

The results come as some of Community's peers have reported results that painted a brighter picture for the third quarter.

Universal Health Services, King of Prussia, Pa., on Tuesday said its net income for the quarter increased nearly 60% to $114.6 million on net revenue of $1.82 billion. The strength of its results came not only from behavioral health, but also from its acute-care hospitals, where adjusted admissions increased 3.6%.

LifePoint Hospitals, Brentwood, Tenn., last week reported a 69.9% increase in income from continuing operations, or $32.5 million compared with $19.2 million during the same period last year. The increase was despite a 4.3% decline in same-facility admissions and 1.3% in adjusted admissions.

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