Tenet

HMA, Tenet still face financial struggles

Anne Zieger — Wed, 13 Aug 2008 10:41:54 -0400

Health Management Associates has had a rough second quarter, putting in it in the unenviable position of being perhaps the worst-positioned major hospital player, according to some analysts. Both HMA and Tenet had difficult second-quarter results, with Tenet posting its second quarterly loss in a row and HMS reporting a significant drop in second-quarter admissions.

The thing is, Tenet could at least boast improved bad-debt control and a smaller loss that had been cut by half from the previous quarter, as well as admissions gains of at least 2.5 percent in most of its regions. It also saw a growth in outpatient volume, including a 3.4 percent growth in outpatient surgery cases through its freestanding ambulatory surgery centers. (One major downside, however, was that commercially-insured admissions fell by 2.2 percent.)

HMA, meanwhile, missed both top-line and bottom-line estimates for Q2. Revenue was up 3.9 percent to $1.11 billion, falling below its $1.13 billion forecast, and net income grew 4.1 percent to $12.4 million. That doesn't sound terrible, but earnings per share still came in a penny short of Wall Street targets.

Generating more concern from company watchers, HMA's admissions fell 3.8 percent in the second quarter, mostly caused by a drop in insured patients. However, observers say some of these problems may have been generated by problems at HMA's Franklin Regional in North Carolina, which has been threatened with a loss in CMS certification over quality problems.

To learn more about the chains' performance:
- read this piece from TheStreet.com

Related Articles:
HMA adopts tougher collections strategy
HMA sells seven-hospital stake to Novant
Analyst says Tenet poised for major turnaround
Tenet turning around: Admissions grow, losses fall

Time to perfect non-aggressive collections methods

Wed, 04 Jun 2008 06:59:59 -0400

Over the last several months, the hospital industry has come under particularly intense pressure to cut down on bad-debt ratios. Not only are high bad-debt levels a major drain on performance, they're often seen as a sign (by, say, ratings agencies and Wall Street) that the hospital doesn't have its act together.

So how can financial leaders respond? Well, lots of ways, of course, including:

* Doing a better job of qualifying patients for state and federal programs that can cover a significant portion of their bills.

* Making it easier for patients to pay their bills (as with Tenet's recent addition of an online bill payment option).

* Collecting more money up front before delivering non-emergency services.

* Instituting collections efforts, either en masse or by targeting patients most likely to pay.

As you'll probably agree, these methods range widely in aggressiveness, from helping the patient file paperwork to full-scale pursuit of their assets.

Now, any one of these tactics might cut down bad-debt ratios overall. And depending on how they're handled, they may or may not discourage the patient from choosing your facility again. The thing is, you've got a couple of powerful forces working against you that argue for perfecting more-gentle tactics.

First, the U.S. economy remains wobbly at best, with jobs going away while gas and food prices are through the roof. Push a patient too hard over a healthcare bill and you'll probably get a bankruptcy notice, not a big recovery.

Meanwhile, with CDHPs still a presence out there, you're going to run into a lot of patients with very substantial co-pays to handle. If your organization doesn't develop the tact, creativity and--let's admit it--sales skills to make sure solvent families pay their bills, you're in trouble. After all, every time you have to fight for your money--in court or through an agency--it costs you.

It will be interesting to see, in the next six to twelve months, whether aggressive strategies or the kinder, gentler machine-gun hand works. I'm arguing that for the time being, being Mr. Nice Guy will work better.

But readers, what do you think? Let me know what your experience has been--I'd love to hear from you. - Anne

Tenet sees $31 million loss for Q1

Wed, 07 May 2008 06:59:57 -0400

Dogged by expenses from lawsuits, Tenet Healthcare announced a $31 million first-quarter loss. Tenet reported a net loss of $31 million for the first quarter of this year, compared with a profit of $75 million for the same quarter last year when it enjoyed a $92 million tax gain. This quarter, Tenet faced litigation costs of $47 million pre-tax, which it set aside for wage and hour lawsuits and other employment matters. On the brighter side, its facilities saw a 1 percent increase in total admissions for this quarter compared to the first quarter of last year. Tenet also saw a drop in charity admissions due to an increased number of patients qualifying for Medicaid.

The unprofitable earnings report doesn't seem to have shocked Wall Street, which actually rewarded the company with a slight gain in its stock price the day the results were released. However, it is something of a counterweight to a recent favorable report from high-profile healthcare analyst Ken Weakly of Credit Suisse Securities, who ranked the stock as "outperform" and predicted a major improvement in its fortunes.

To learn more about Tenet's results:
- read this press release

Related Articles:
Analyst says Tenet poised for major turnaround
Tenet turning around: Admissions grow, losses fall
Tenet may be ready for comeback
Tenet execs detail turnaround progress
Tenet fights bankruptcy rumors

Analyst says Tenet poised for major turnaround

Wed, 30 Apr 2008 06:59:57 -0400

This must be satisfying for Tenet execs to see: A major healthcare analyst has turned tail and upgraded the hospital company's rating dramatically, after slamming it less than a year ago and suggesting it would soon go out of business.

Eight months ago, leading healthcare analyst Ken Weakly of Credit Suisse Securities predicted that Tenet's stock would drop to $2 per share from its then-status of $3.67 per share, rating the stock as "under perform." At the time, Weakly noted that several threats, including the chain's reliance on Medicare outlier payments and lower-than-needed patient volumes, posed serious threats to the chain's survival, and predicted that within three years it would go bankrupt. Not only that, the company was still recovering from its protected legal troubles, which included a $725 million payment to settle Medicare billing charges.

Now, however, Weakly has done a complete turnaround, changing his rating to "outperform" and pushing his price forecast up to $8 per share from $6. With Tenet not only boosting patient volumes, but also seeing better pay from health plans, the company now has a "sustainable economic profile," Weakly wrote in a recent note to investors. In addition to taking in more money, Tenet has cut costs aggressively, eliminating almost 1,500 jobs in 2007, shed its poorer performing hospitals and re-structured services to focus on more profitable eras like neonatal care and cancer treatment.

To learn more about Tenet's situation:
- read this article from The Dallas Morning News
- read this piece from The Boston Globe

PLUS: Though Tenet may still be struggling, hospital operator Universal Health Services is going strong, with profits having jumped nearly 25 percent during the first quarter of this year.

Related Articles:
Tenet turning around: Admissions grow, losses fall
Tenet may be ready for comeback
Tenet execs detail turnaround progress
Tenet fights bankruptcy rumors

Checking patients' credit scores still controversial

Wed, 19 Mar 2008 07:59:59 -0400

Checking patient credit scores still controversial

As some of you may know, a growing number of hospitals have started working with agencies that estimate how likely it is that a patient will pay their portion of the bill--and sometimes, whether they're likely to qualify for government assistance, too. A recent Wall Street Journal piece provides an intriguing snapshot of the race to win this business.

According to the WSJ, Vendors in this space include Equifax, which has developed a special score separate from its standard consumer credit rating to predict if patients can repay medical bills. (It develops the score by cross-referencing credit reports with hospital payment records.)

Another vendor building speed in this arena is SearchAmerica, which analyzes patient credit bureau data for hospitals. Search America says its client base has doubled, to 900, since 2005 alone. Not only does SearchAmerica generate a healthcare credit score that predicts likelihood of payment, it also helps hospitals guess whether the patient will qualify for financial assistance.

Then, there's a joint venture between Tenet, Fair Isaac and a venture-capital firm that have teamed to form a startup called Healthcare Analytics, which assembles bill-collection histories from hospitals. It plans to use them to develop methods for predicting which patients will pay their bills.

Of course, hospitals need to collect their bills like anyone. What more, hospital execs say, these methods help them identify patients who can realistically pay, rather than uniformly twisting the arms of all patients--solvent or not.

I'm not here to tell you, as healthcare financial leaders, whether to sign on board with one of these vendors. Clearly, from a financial standpoint they have their merits. But I do want to underscore the point that this isn't just about money. As I see it, anything that adds credit analysis to the mix is going to create controversy, unless your collections staff uses a kind of delicacy and tact that aren't the strong points of that profession.

In today's world, consumers are understandably gun-shy about giving away the rights to further investigate their credit histories, even if it stands a chance of getting them qualified for financial assistance. In short, many patients will find the practice very intrusive. In the future, I'd love to know whether my assumptions are off base, and patients accept these procedures without a murmur. I'd also love to hear any horror stories you might have, so I can share them with your colleagues. Write to me and tell me what you think! - Anne