profit hospital

Bad debt expense drops at for-profits for Q1 '08, Fitch says

Wed, 28 May 2008 06:59:58 -0400

Well, in a season of battered markets, here's some welcome good news. According to Fitch Ratings' For-Profit Hospital Industry Quarterly Diagnosis, bad debt levels actually fell among for-profit hospitals as a percentage of revenues, from 18.4 percent in the fourth quarter of 2007 to 17.7 percent in the first quarter of 2008. Things were bad last quarter, hitting many for-profit chains' bottom lines hard, and analysts had actually anticipated higher levels of unpaid medical bills this quarter.

Among the for-profit chains, Tenet had the lowest bad debt expense this quarter, with 12.1 percent of revenues, followed by LifePoint Hospitals, with 13.5 percent adjusted bad debt expense as a percentage of revenues. Tenet's numbers were improved by lower uninsured and charity care admissions.

In the recent report, Fitch analyst Lauren Coste said that relatively low unemployment rates were the main reason the for-profits' bad debt didn't climb. Also, she noted that hospitals have adopted more conservative accounting practices over the past couple of years, which have limited industry exposure to special bad debt charges. However, this interlude may not last. If job losses climb, or if states cut Medicaid funding, bad debt could begin to accelerate again, Coste noted.

To learn more about the report:
- read this InsideARM article

ALSO: Missouri hospitals wish they had it so good. According to the state's trade association, hospitals there saw uncompensated care grow 32 percent. Article

Related Articles:
In 2007, bad debt rising for hospitals
Bad debt savages HCA, LifePoint profits
Bad debt hits Health Management Assoc. earnings

Tenet Healthcare offers patients ability to pay bills online

Wed, 28 May 2008 06:59:56 -0400

For-profit hospital chain Tenet Healthcare has begun offering patients at its hospitals the ability to pay their bills online. To access the online payment system, patients treated at any of its 53 facilities will need to complete an enrollment process from their hospital's website. Once enrolled, they'll be able to make payments, update their profiles, set up recurring payment plans, access a glossary of billing terms and view answers to frequently asked billing questions. The application supporting the billing functions is NCR Corp.'s Online Bill Pay, which Tenet pilot-tested earlier this year.

To learn more about this application
- read this Healthcare Finance News article

Related Articles:
Case study: FL hospitals offer online payments
Study: Better records could boost self-pay collections

S&P to monitor non-profit hospital tech spending

Wed, 14 May 2008 06:59:58 -0400

Over the next few years, credit rating firm Standard & Poor's plans to take a much closer look at the extent to which not-for-profit hospitals keep up with their peers in making technology investments while keeping finances otherwise in order. In fact, investment in advanced medical technology will be a key factor differentiating those with good and poor credit ratings, the firm said.

That being said, a strong technology investment program won't impress S&P all by its lonesome. The firm says it's going to look carefully at whether a hospital's medical technology investments made sense and what impact they had. Generally speaking, the firm warned, it still expects that given the pressures on the industry, hospital credit downgrades probably will outnumber upgrades in 2008, and possibly into 2009.

To learn more about S&P's plans:
- read this Modern Healthcare article (reg. req.)

Related Articles:
Moody's shows little enthusiasm for non-profit hospital finances
Health IT plans affect financial ratings
Ratings firms slam nonprofit hospital finances
Crisis may change tax-exempt bond rating system

MI hospital defaults on bonds, discusses selloff

Wed, 09 Apr 2008 06:59:55 -0400

Things have gotten ugly for financial managers at North Oakland Medical Center. The 178-bed hospital, which is based in Pontiac, MI, defaulted on $38.5 million in bonds issued by the Pontiac Hospital Finance Authority. The hospital lost $13.4 million from operations in fiscal 2007, and had a meager 18 days cash on hand on Dec. 31, according to Standard & Poor's. The hospital missed a January 15 bond payment, which lowered its S&P rating on the series from B to D.

Executives say that they've been squeezed by their role as a safety-net hospital, which resulted in their spending $21 million in uncompensated care over the last three years. It hasn't helped that admissions have fallen from 7,600 in 2006 to a projected 5,000 this year.

Given these conditions, North Oakland execs are in talks to sell the facility to one of several local chains, including Henry Ford Health System, Trinity Health and William Beaumont Hospitals.

To learn more about the hospital's fate:
- read this Crain's Detroit Business piece (reg. req.)

Related Articles:
Moody's shows little enthusiasm for non-profit hospital finances. Hospital editorial
TX public health system faces loss of profitable patients. Hospital news
HMA sells seven-hospital stake to Novant. HMA news

SPOTLIGHT: For-profits see rising uncompensated care numbers

Wed, 09 Apr 2008 06:59:52 -0400

According to a new analysis, for-profit hospitals are struggling to deal with uncompensated care, too. While the for-profit hospital sector has cut the percentage of uncompensated care it delivers from 18.4 percent of adjusted net revenue in the third quarter of 2007 to 17.8 percent for the fourth quarter, that fourth quarter number is 1.2 percent higher than the same quarter in 2006. Financial article

ALSO NOTED: Moody's downgrades UHS; Baby boomer wave drives up value of healthcare properties; and much more...

Wed, 09 Apr 2008 06:59:50 -0400

> As baby boomers age, they're likely to drive a steep rise in the value of healthcare properties, according to a new report. Article

> Moody's has downgraded Universal Health, concerned about its debt ratio and operations environment. Article

> A Florida hospital is telling its constituents that it's not worried about losing $1 million in potential funding, and that it will go ahead with plans to build a 50-bed patient tower. Article

> It's yet another tale of hospital financial woes: A Chicago-area not-for-profit hospital beloved in its community will probably have to close. Article

And Finally... This man actually was late to his own funeral. Article

Non-profit finances deserve second look

Wed, 02 Apr 2008 07:59:59 -0400

Looked at one way, it's easy to see why an agency like Moody's would be less than enthusiastic about the financial prospects of not-for-profit hospitals. Just consider what's going on in many instances:

Falling revenue
Worsened liquidity
Increases in charity care burdens
Capital availability issues due to tightening of the credit markets

It's a pretty depressing picture, I'll admit, and one that shouldn't be taken lightly. These forces have indeed managed to sink some non-profits already, and will, without a doubt, impact more heavily.

In fact, looking at stories like the one below, in which a for-profit HCA rode in on its white horse and pumped more than a half-billion in capital into a former non-profit chain, you might think that the solution to U.S. healthcare woes is to go for-profit all of the way.

However, that would be far too narrow a reading of the facts. If you look at the non-profit sector in terms of its effectiveness, you'll get a much different picture. As any non-profit hospital exec would tell you, they may be operating at a deficit, but they're providing a lot to their community, including direct charity care, community education and other benefits.

I understand why ratings firms like Moody's look only at the metrics that interest for-profit investment houses; that is, after all, what they're paid to do. But it seems to me that relying too heavily on such ratings provides a distorted picture of the mission and financial structure of non-profits.

As for me, as an analyst I'd be far more interested in an analysis that included some sort of "mission" index (how effectively the hospital was fulfilling its charitable purpose). Certainly such an index would have to include calculations that weighed its ability to deliver financially. But the metric would weight delivery of community benefits far more heavily.

What do you think? Should non-profits take control of how their financial story is told, and how much emphasis is placed on their charitable accomplishments? Write to me and let me know. - Anne