CHS sees strong quarter thanks to HMA purchase, fewer uninsured patients

Community Health Systems reported strong results in the second quarter thanks to its acquisition of Health Management Associates in January and to the end of abnormal winter weather patterns that had hurt admissions in the first quarter of the year, the Franklin, Tenn.-based provider reported Thursday. The chain also is benefiting from a reduction in uninsured admissions thanks to the Patient Protection and Affordable Care Act, its CEO said.

Second-quarter net income hit $42 million compared with $30 million in the same period last year. For the first six months of the year, the system reported a loss of $70 million compared with net income of $109 million in the same period last year.

Net operating revenues for the quarter hit $4.8 billion, up from $3.2 billion in the same period last year. Net operating revenue does not include a $752 million provision for bad debt recorded in the quarter. That compared to a $520 million bad debt provision recorded in the first quarter of 2013 and likely reflects the greater number of hospitals now under the CHS umbrella.

Adding HMA and other recent purchases sent overall admissions higher, the provider reported. Results for the quarter included a 47.8% increase in total admissions and a 51.6% increase in adjusted admissions compared with the same period in 2013. However when the impact of expansion is taken out, admissions fell 4.8% while adjusted admissions fell 1.2% compared with the same period in 2013.

“These results reflect improved operating synergies from the integration of the HMA hospitals and a more favorable operating environment with less weather disruptions than we experienced early in the year,” Wayne Smith, chairman and CEO of CHS, said in an earnings release. “At the same time, we have continued to position the company to capitalize on the opportunities created by implementation of the Affordable Care Act.

“We have already realized the early benefits of healthcare reform in the second quarter with a decline in uninsured admissions and a modest shift in payer mix, and we expect this trend to continue with further expansion of insurance coverage. While we were pleased with the sequential improvement in our volume trends over the first quarter, we are focused on initiatives to drive our overall admissions.”

Discussing the $3.9 billion HMA deal, Smith said, “Our integration of the HMA facilities is progressing on target and we expect to achieve our estimated operating synergies for 2014.” The HMA deal made CHS the largest hospital chain in the country by number of hospitals.

CHS hasn’t finished buying hospitals. Earlier this month it positioned itself as the stalking horse bidder for a Mississippi hospital, Natchez (Miss.) Regional Medical Center, a 155-bed, county-owned hospital that filed for bankruptcy this year.

Follow John N. Frank on Twitter: @MHJFrank