Medicare Advantage payer denials and Hurricane Helene put a damper on Community Health Systems' third-quarter earnings results.
CHS continues to weather increasing payer denials and coding downgrades, CEO Tim Hingtgen told analysts on Thursday's earnings call. He said the for-profit health system stood up an enhanced utilization review program and centralized its physician adviser services in the last couple of years to make sure CHS receives appropriate payment for the care it provides.
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Chief Financial Officer Kevin Hammons said payer denials have doubled from a year ago, and more than half are from Medicare Advantage plans. He estimated a $10 million hit from denials in the third quarter.
"While denial activity is not new, the tactics used by the payers have become more aggressive," Hammons said on Thursday's call.
Meanwhile, medical specialist fees were up 10% from a year ago, largely due to anesthesia services, Hammons said.
CHS pulled emergency physicians and hospitalists in-house starting last year, including 500 clinicians previously employed by American Physician Partners after it folded in July. Hammons said in-house anesthesia services are coming online in CHS' first large market in the fourth quarter.
Unexpected expenses also took a toll in the third quarter.
Hurricane Helene, which struck Florida in late September, led to $7 million in missed revenue, Hammons said. Hurricane Milton made landfall less than two weeks later.
CHS' ShorePoint Health and Physicians Regional Healthcare System, both based in southern Florida, and Tennova Newport Medical Center in Tennessee were most affected by the storm, Hingtgen said. The ShorePoint hospital in Punta Gorda sustained major damage from flooding and remains closed, he added.
Other factors were also at play in CHS' lackluster third-quarter performance. CHS reported a $391 million net loss, or $2.95 per diluted share, in the third quarter, compared with a $91 million loss, or 69 cents per share, in the year-ago period. The health system mostly attributed the quarterly losses to additional accruals for professional liability claims and losses from the sale of businesses.
Hammons said CHS is making progress on its plan to sell $1 billion of facilities, and the majority of the remaining deals are expected to close in the fourth quarter or first quarter of 2025.
CHS lowered its guidance for 2024 adjusted earnings to $1.5 billion to $1.54 billion, compared with the previous projection of $1.52 billion to $1.6 billion.