LifePoint Health continued to struggle with sluggish volumes and ballooning costs at the outset of 2018.
Admissions to the Brentwood, Tenn.-based hospital chains' 71 campuses dropped 2.2% during the first quarter of 2018 compared with the same period a year earlier on a same-hospital basis, the company reported in its earnings release Friday.
LifePoint CEO Bill Carpenter told analysts and investors in a call Friday morning that the company continues to forecast flat volumes in 2018, but it is forging ahead with its goals of driving margin improvement across hospitals, managing costs in a tough volume environment and returning capital to shareholders.
LifePoint entered into definitive agreements during the first quarter to sell three of its Louisiana hospitals, a move Carpenter said will yield a little over $20 million. The hospitals—Mercy Regional Medical Center in Ville Platte, Acadian Medical Center in Eunice and Minden Medical Center in Minden—generate about $100 million in annual revenue, but their earnings have been flat in recent years, he said. LifePoint expects those deals to close in the second quarter of 2018.
Carpenter didn't say whether the health system expects to divest additional facilities, but said LifePoint is always looking at opportunities.
"Let's be clear: We don't buy hospitals in order to turn around and sell them," he said.
The company posted a net loss of $5.3 million in the first quarter of 2018, down from net income of $64 million during the same period in 2017. Revenue on a same-hospital basis fell 0.4%, to $1.6 billion in the first quarter of 2018 from the same period in 2017. Overall revenue fell 1.7% during that time, while expenses rose 4.7%.
LifePoint's same-hospital supply costs as a percentage of revenue increased 16.6% during the first quarter of 2018. Mike Coggin, LifePoint's chief financial officer, said that increase stemmed from growth in high acuity service lines, such as cardiology and pulmonology.
Inpatient surgeries fell 3% during the first quarter of 2018 compared to the same period in 2017. And emergency room visits dropped 4%. Coggin said that despite the drop in ER visits, the chain saw a better case mix, with fewer low acuity visits among Medicaid and self-pay patients.
LifePoint continued to battle high costs during the quarter, including elevated capital expenditures that will continue until 2020, Coggin said. LifePoint plans to spend $475 million in capital expenditures this year alone, a number that will decline next year.
"What that yields will probably be a flat level of cash flow," he said, "almost a negligible amount of free cash flow for us in calendar 2018."