Tenet Narrows Loss, Collection Rates Rise

 
Hospital operator Tenet Healthcare Corp. said today that its third quarter loss narrowed on higher revenues and more insured patient admissions.  However, bad debt expense remains an issue. 

The Dallas-based chain said its net loss was $59 million or 12 cents in the quarter ended September 30, 2007, compared to $89 million or 19 cents in the third quarter of 2006.  The loss includes results from discontinued operations. The loss from continuing operations for the quarter was $35 million, or $0.07 per share. Same-hospital adjusted EBITDA increased 54 percent to $176 million from $114 million a year earlier.
 
“Our focus on the targeted growth of selected hospital services was a key factor in the improved commercial business we had in the third quarter,” Stephen L. Newman, M.D., Tenet’s chief operating officer, said in a statement. “Commercial admissions in women’s services, neonatology, and oncologic and open heart surgeries were targeted areas for growth and all showed material increases.” 

The company set aside $158 million in the quarter for bad debt, versus $149 million a year ago. Tenet said bad debt expense was 7.2 percent of net operating revenues in both the third quarter of 2007 and 2006, despite a 7 percent increase in uninsured admissions. Total uncompensated care expense grew to $321 million from $302 a year ago.

Tenet said its bad debt expense ratio is stabilizing due to improved collections, with its self-pay collection rates rising to 36 percent from 30 percent and managed care collection rates rising slightly to 98 percent. Both rates were calculated based on an average collection period of 18 months.

Tenet said a 58.4 percent increase in charity care outpatient visits was driven mostly by regulatory changes in California and an influx of charity patients to one of its Georgia hospitals, which took on a bigger role as a medical resource for the local community. Tenet owns and operates 56 acute care hospitals in 12 states.