SUN STAFF AND WIRE REPORTS
HCA Inc., the biggest U.S. hospital chain and operator of two Las Vegas hospitals, today said it had a fourth-quarter profit of $317 million, less than some analysts expected, as more patients failed to pay bills. The company also increased its dividend.
Net income was 63 cents a share, compared with a loss of $102 million, or 20 cents a share, a year earlier when HCA had costs to settle a U.S. fraud case, the company said in a statement. Revenue rose 11 percent to $5.6 billion.
In the Las Vegas area, HCA owns Sunrise Hospital & Medical Center and the adjacent Sunrise Children's Hospital, MountainView Hospital and soon-to-open Southern Hills Hospital & Medical Center.
Nationally, HCA is battling competition from specialized surgery centers run by doctors and is trying to collect more money from patients who lack health insurance. Influenza cases accounted for half of the 2.1 percent increase in patient volumes in the quarter, the company said, and costs rose for unpaid hospital bills.
"They're still dealing with essentially losing market share on the outpatient business in some places," said Stephens Inc. analyst Nancy Weaver, who rates HCA shares "overweight" and owns none. "They're going to be a lot more aggressive."
HCA shares fell $1.45, or 3.1 percent, to $44.85 in New York Stock Exchange composite trading as of 11 a.m. The Nashville, Tenn.-based company's stock has gained 11 percent in a year.
Profit excluding $25 million for a change related to government Medicaid payments would have been 58 cents a share. On that basis, HCA was expected to earn 60 cents a share, the average estimate of analysts surveyed by Thomson Financial. The company has failed to beat earnings estimates for the past four quarters.
HCA's board also boosted the dividend to 13 cents a share from 2 cents a share, payable June 1 to shareholders as of May 1. The reward for shareholders comes after a change in tax laws and still leaves the company with enough money for capital spending and stock buybacks, Chief Executive Jack Bovender said in a statement.
Admissions rose 5.7 percent for all company hospitals during the quarter, though less than half that much for facilities HCA has owned at least a year -- the standard measure in the industry.
In the Las Vegas area, admissions rose 7 percent at MountainView Hospital to 3,875 patients in the fourth quarter from 3,607 patients a year earlier. MountainView's patient days, meaning the number of days a patient occupied a bed, rose to 17,250 days in the fourth quarter from 15,298 days in the year-ago quarter.
Rick Plummer, MountainView spokesman, said, the number of admissions and patient days were up for multiple reasons.
"The biggest reason is growth in the northwest corridor," he said. "Additionally, our medical staff has matured and is (providing) more services."
The hospital has seen an increase in open-heart surgeries, which keep patients in the hospital longer, nuerosurgeries and gastric bypasses, Plummer said.
Sunrise and the adjacent Sunrise Children's hospitals reported a slight decrease in the number of admissions and patient days in the fourth quarter because of an increase in overall beds in the valley, spokeswoman Cheryl Smith said.
Competitor Universal Health Services Inc. opened a 176-bed hospital in November and other hospitals have been expanding to keep up with the population growth.
Combined admissions for the Sunrise hospitals fell to 8,917 patients from 9,228 in the year-ago quarter. Patient days dropped to 46,613 days from 47,579 days.
Companywide, unpaid bills rose to more than 11 percent of revenue from about 8.6 percent in the fourth quarter of 2002, the company said, as Americans lost health-insurance coverage through job cuts or couldn't pay higher fees passed along by employers.
HCA, which last year changed its charity care policy for the uninsured, said it provided $201 million in free care or discounts during the quarter, up from $156 million a year earlier.
Tenet Healthcare Corp. and Triad Hospitals Inc., HCA's closest rivals, also have reported higher costs for the uninsured.
HCA's outpatient revenue was little changed in the quarter, an indication that the company hasn't been successful in luring patients away from surgery centers, Weaver said.
Short of signing joint ventures with doctors, HCA could pressure managed-care plans not to cover competing surgery centers or could threaten to cancel such physicians privileges at its hospitals, the analyst said.
"I think they're taking a more aggressive tone toward their doctors than is wise," Weaver said.
In December, HCA named Marilyn Tavenner to head outpatient services to strengthen the division. Tavenner had headed 18 hospitals in the company's central Atlantic division.
After the U.S. Department of Justice accused the company of in 1997 filing fraudulent Medicare reports and paying kickbacks to doctors, HCA poured money into emergency rooms and medical services such as cardiology to restore profit.
HCA pleaded guilty to criminal charges and paid $1.7 billion to resolve the fraud case, the last portion of it in the fourth quarter of 2002 when the compay had revenue of $5 billion.
"It's almost as if they de-emphasized the outpatient side of the business," said Joseph Chiarelli, an Oppenheimer & Co. analyst who has a "buy" on HCA stock. "Now they see that there's an opportunity."
Las Vegas will continue to be an important market for HCA. Southern Hills Hospital is scheduled to open on March 1 and will be licensed for 130 beds in the southwest part of the valley. MountainView is expanding its fifth floor by 36 beds and plans to get approval from HCA later this year to build a 140-bed patient tower. Sunrise Children's Hospital is expanding its pediatrics department by adding 60 beds to its 175 current beds. Sunrise is also expanding its Women's Pavilion from three to five floors.
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