Vanguard Narrows Loss but Doubtful Accounts Grow

Hospital operator Vanguard Health Systems said Monday that its net loss for the quarter ended September 30, 2007 narrowed to $6.9 million, compared to a net loss of $7.7 million during the prior year quarter.

The Nashville, Tenn.-based company said it had $662.5 million in sales during the first quarter of its fiscal year 2008, up more than 7 percent from the prior year period. Patient service revenues increased $35.5 million during the period and health plan premium revenues increased $8.7 million.

The provision for doubtful accounts as a percentage of patient service revenues increased to 9.7 percent during the quarter, up from 7.8 percent in the earlier period, in part because of a new bad debt allowance policy implemented on July 1 that more quickly recognizes uncollectible accounts associated with uninsured or underinsured patients. The company said the increase in doubtful accounts was partially offset by a quarter over quarter decrease in charity care deductions as a percentage of patient service revenues from 4.3 percent to 3.1 percent.

"We are pleased with the progress we have made with our quality of care and expense management initiatives during the first quarter of our new fiscal year," Charles N. Martin, Jr., chairman and CEO said in a press release. "The many operating challenges that face our company and the hospital industry are well documented and will likely persist for several more quarters.”

Vanguard also said net cash from operations was $57.1 million for the first quarter, compared to $0.4 million for the prior year quarter.

The improvement was primarily attributable to improved cash collections of accounts receivable during the first quarter and a decrease in payments of accounts payable and other liabilities during the quarter.

Vanguard owns and operates 15 acute care hospitals and other facilities in Chicago, Phoenix, San Antonio, Tex., and Massachusetts.