Tenet, Community Health Systems earnings hurt by prior CMS settlement

First-quarter earnings for two major healthcare systems fell compared with 2012 numbers, but the numbers were skewed by large financial settlements from the Centers for Medicare & Medicaid Services paid in the first quarter of 2012 to cover years of underpayments.

Dallas-based Tenet Healthcare Corp. reported 2013 first-quarter earnings declined $36 million compared with last year's first quarter, when Tenet received a $75 million one-time payment from the so-called Medicare rural floor settlement. Excluding revenue from the settlement, adjusted revenue increased by 16.6 percent year over year, Tenet said in an announcement.

Tenet reported first-quarter earnings of $274 million in 2013, with income from operations of $34 million after taxes, compared with $13 million for the same quarter last year.

Inpatient admissions fell 4 percent, but outpatient visits increased by 2.2 percent year over year, according to the announcement. Tenet blamed half of the decline on loss of the Leap Year day, and both Easter and Passover falling during the first quarter.

Meanwhile, Tenet's uninsured and charity admissions fell 2.8 percent, while emergency department admissions grew 3.1 percent.

Franklin, Tenn.-based Community Health Systems also experienced a drop in first-quarter admissions this year--a 4.4 percent decrease, in its case. The hospital noted the same holiday and Leap Day factors in its earnings announcement.

Adjusted first-quarter earnings totaled $493.8 million in 2013, a 7.8 percent drop from the first quarter of 2012 with the rural floor settlement included. Excluding the $102 million settlement from CMS, first-quarter 2012 income was $477.6 million, leaving CHS with a $16.2 million year-over-year increase.

 On a same-store basis, net operating revenues increased 1.4 percent compared with the same period in 2012, CHS said.

"Our results for the first quarter reflect the current dynamic market conditions and a more challenging operating environment for healthcare providers," Wayne T. Smith, chairman, president and CEO of Community Health Systems, said in the announcement.

To learn more:
- read the Tenet announcement (.pdf)
- here's the CHS announcement