CHS Reports 3Q Results, Status of DOJ Investigation
FRANKLIN, Tenn. – Net operating revenues for Community Health Systems Inc. rose modestly during the third quarter from the same period a year earlier, the company reported.
CHS also announced, in a news release issued following the close of financial markets Wednesday, it is in negotiations with the U.S. Justice Department to resolve claims in connection with DOJ’s investigation into the company’s short-stay hospital admissions for the years 2005-2010, as well as its investigation at a hospital in Laredo, Texas.
CHS owns ValleyCare Health System of Ohio, which operates Northside Medical Center in Youngstown, Trumbull Memorial Hospital in Warren and Hillside Rehabilitation Hospital in Howland. CHS purchased those three hospitals and other assets of bankrupt Forum Health in 2010. In August, Sharon Regional Health System announced it entered into a potential purchase agreement with CHS, which also is partnering with the Cleveland Clinic to purchase the Akron General health System.
“We are pleased with our results for the third quarter of 2013 during what has continued to be a very challenging operating environment for health-care providers,” said Wayne T. Smith, CHS chairman, president and CEO, in a prepared statement. “Our net operating revenues improved over the prior year period on both a consolidated and same store basis in spite of ongoing volume weakness. We have begun to realize the benefits of our cost management initiatives, and we remain focused on driving operating efficiencies across our hospital network. We believe we have the right strategies in place as we continue to position Community Health Systems to fully benefit from health-care reform.”
The company said revenues for the three months ended Sept. 30 totaled $3.22 billion, up 0.2% from the $3.21 billion for the same period in 2012. Income from continuing operations decreased to $21.6 million for the quarter, compared with $58.8 million for the same period in 2012. Adjusted earnings for the three months were down 21.4% from a year earlier, $375.2 million compared with $477.3 million for the same period in 2012.
Based on the negotiations with the Justice Department, which CHS clarified aren’t final, the company has set aside a reserve of $98 million, or 65 cents per share, to cover the government’s claims for Medicare admissions, “certain claims” related to the Laredo hospital, and other related legal expenses. The reserve is not meant to include claims in the investigation arising from Tricare, Medicaid or third-party legal expenses, CHS said. Excluding the $98 million reserve for the governmental settlement and $4.2 million of expenses related to its expected acquisition of Florida-based Health Management Associates Inc., adjusted earnings were $477.4 million for the quarter.
Net operating revenues for the nine months ended Sept. 30 totaled $9.77 billion, a 0.1% increase compared with $9.75 billion for the same period in 2012. Income from continuing operations decreased to $165.0 million, or $1.21 per share (diluted), for the nine months ended Sept. 30, compared with $260.6 million, or $2.27 per share (diluted), for the same period in 2012.
Adjusted earnings for the first nine months of the year totaled $1.28 billion compared with $1.50 billion for the same period in 2012, representing a 14.2% decrease. Excluding the $98.0 million reserve for the governmental settlement and $5.3 million of expenses related to the anticipated HMA acquisition, adjusted earnings were $1.39 billion for the nine-month period.
The consolidated and same-store operating results for the three months ended Sept. 30 reflect a 6.8% decrease in total admissions and a 3.9% decrease in total adjusted admissions compared with the same period in 2012. For the nine-month period, consolidated results a 5.4% decrease in total admissions and a 3.1% decrease in total adjusted admissions compared with the same period in 2012. On a same-store basis, admissions for the first nine months of 2013 decreased 6.2% while adjusted admissions decreased 3.9% compared with the same period in 2012.
In September, members of the union representing registered nurses at ValleyCare’s Northside Medical Center staged a one-day walkout to protest the lack of progress on negotiations for a new labor agreement. Following the one-day strike, some members of the bargaining unit were told not to return to until several days later in some cases.
Copyright 2013 The Business Journal, Youngstown, Ohio.
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