Wayne Smith, the company's chairman and CEO, described the winter as the worst he's ever experienced. About 65% of CHS' hospitals, or 130 facilities, in Arkansas, Illinois, Indiana and Pennsylvania, saw volume declines as a direct result of the weather, he said.
In total, CHS estimates that it lost 2,600 admissions and 6,000 adjusted admissions, equating to about $58 million in revenue, due to freezing and sub-freezing temperatures and storms. However, the impact was largely felt in the first two months of the year, with March and April patient volumes returning to levels more in line with expectations.
The quarter was an active one for CHS overall, including its integration of Health Management Associates, as well as initial results from insurance expansion under healthcare reform. The company already has recognized $12 million in synergies since the HMA merger closed in late January, and expects to achieve $100 million in synergies this year and $250 million over two years, officials said.
“The integration is going extremely well,” Smith said on the call. “Our synergies are coming along. We've done a good job, working our way north from Naples to Nashville.” But he added, “This is the first quarter of a long process for us.”
In addition to acquisition and integration costs, CHS said it set aside $101.5 million in a reserve fund to settle HMA's prior legal matters, which also affected results. “I believe we are close to an outcome in this matter,” Smith said.
Across its portfolio, CHS continued to struggle with declining patient volumes, down 8.1% year-over-year, or 5.3% when adjusted for outpatient activity.