Bad debt savages HCA, LifePoint profits

Two hospital chains checked in with quarterlies over the last week, and they're singing the same song: they've both had their profits socked by bad debt. 

HCA, for one, reported that its bad debt expenses for the fourth quarter of 2007 was 13.2 percent of revenue, about 21 percent more than the 10.9 percent level it reported for the fourth quarter of 2006. Meanwhile, bad debt expenses for all of 2007 were 11.7 percent of revenue, up from 10.4 percent in 2006. Taken as a whole, bad-debt was fueled not only by uninsured patients, but also lower collections on patient accounts and annual increases in HCA's gross prices. Meanwhile, profits for 2007 decreased by 15.9 percent, to $874 million from $1.04 billion in 2006, despite a revenue increase of 5.4 percent to $26.86 billion and inflow of $661 million for the sale of three hospitals.

LifePoint Hospitals, meanwhile, saw profits drop 30 percent for fiscal '07, undermined not only by volume losses of 15 percent but also a rise in bad debt to 16 percent. For the year, things looked worse. Despite a revenue increase of 9.7 percent, to $2.63 billion, profits fell 30.2 percent to $102 million in 2007, compared with profits of $146.2 million for fiscal '06.

To find out more about the chains' bad debt crisis:
- read this Modern Healthcare piece and this other piece (reg. req. for both)

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