Community Health Systems reported strong earnings for the third quarter, largely thanks its acquisition of Health Management Associates. The hospital chain also recorded a $75 million charge to cover a tentative settlement resolving a federal investigation into Medicaid claims at three of its New Mexico hospitals.
The Franklin, Tenn.-based company reported third-quarter earnings of $62 million on $5.56 billion in operating revenue, compared with $4 million on $3.17 billion in operating revenue in the same quarter last year. Without the impact of the HMA deal, revenue was up 2.8%.
Total admissions in the third quarter were up 49% compared with the same quarter in 2013, and adjusted admissions—which reflect outpatient activity—were up 53.2%. For the first nine months of the year, admissions were up 40.2% and adjusted admissions were up 44.4%.
Those increases all stemmed from the January 2014 addition of the HMA hospitals. Same-facility admissions in the third quarter were down 3.9% and same-facility adjusted admissions were flat compared with same period last year. From Jan. 1 to Sept. 30, same-facility admissions would have decreased 5.5%, while adjusted same-facility admissions would have decreased 2.1%.
“We have made substantial progress during the year with respect to the HMA hospitals as we continue to identify and realize additional operating synergies,” CEO Wayne Smith said in a news release announcing the results. “We are confident in our ability to achieve our expected synergy targets for 2014, and we will look for further opportunities to improve our operating efficiencies in these acquired facilities.”
Smith also said the Affordable Care Act has brought about a decline in uninsured admissions and a “favorable shift” in the company’s payer mix.
CHS also reported that it has reached a tentative agreement with the U.S. Justice Department that would resolve allegations that three New Mexico hospitals operated by the company had improperly submitted claims for Medicaid reimbursement. CHS said it has set aside $75 million for the agreement and that it paid $2 million in legal fees during the third quarter related to the settlement.
CHS reported a net loss of $8 million during the first nine months of 2014, compared with $113 million in net income during the same period last year. Net operating revenue for the nine-month period was $13.8 billion, up from $9.6 billion in 2013.
The company also announced Monday that it had obtained full control of Gaffney (S.C.) Medical Center, a facility HMA previously owned in a joint venture with Novant Health, a Winston-Salem, N.C.-based not-for-profit system.
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