The company's share price took a dive of about 10% after the results were released Monday. Its $288 million of earnings before interest, taxes, depreciation and amortization came in toward the lower end of its guidance and below what some analysts had expected to see from the company; it also lowered its EBITDA outlook for the fourth quarter.
The Dallas-based chain attributed the results to a number of factors. The company saw a 2.6% decline in inpatient admissions and a 0.5% drop when admissions were adjusted for outpatient activity. The chain is not expecting much improvement in the fourth quarter.
“We think there's just a general suppression of utilization,” Fetter said. The financial environment, he said, is leading people to be more cautious about their spending, particularly as they're responsible for more cost-sharing. “It's proving to be more difficult than we anticipated.”
But Fetter pointed out that Tenet—which acquired Vanguard Health Systems on Oct. 1—has a significant presence California, Texas and Arizona, states where there are large numbers of uninsured individuals who could gain health insurance come January.
“Frankly, I can't wait till next year,” he said, adding that Tenet and its revenue-cycle management division Conifer Health Solutions have been heavily involved in outreach efforts to sign people up for health insurance plans.
Conifer's revenue increased 84% year-over-year to $225 million in the third quarter.
Tenet hospitals will be in-network in 75% of the plans available through health insurance exchanges in its markets, and it will be included in 80% of the lowest- and second-lowest priced plans, according to Fetter.
“These are very affordable products,” he said. “You're going to be able to get health insurance for less than a cellphone payment.”
Reimbursement rates will be slightly below commercial rates, he added. “Pricing is good,” he said. “That's a much better outcome than we expected.”
Yet one continued challenge for all hospitals will be the effect of greater cost-sharing for patients in the form of higher deductibles, co-pays and co-insurance. Tenet saw a $4 million increase in bad debt during the third quarter, three-fourths of which was due to uninsured revenues. The chain's collection rate for self-pay patients was 28.8%.
Nashville-based HCA, meanwhile, reported results that were in line with a preview issued last month. Its same-facility admissions increased 0.7% and adjusted admissions increased 1.1%.
HCA likewise saw greater revenue per admission, largely due to higher patient acuity and changes in its payer mix. Its total third-quarter revenue increased 4.9% to nearly $8.5 billion.
Follow Beth Kutscher on Twitter: @MHbkutscher
