We are ramping up:Columbia sticks HMOs with cost increases:
This is just beginning.
HMOs are sticking businesses for cost increases;
Columbia HCA, and soon <VBG>, HealthSouth to follow!
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The company took pride in showcasing its ability to negotiate better
contracts with managed care, attributing this to a companywide resolve to
challenge HMOs. John Hindelong, an analyst with Donaldson, Lufkin &
Jenrette, suggested that the hospital industry had watched HMOs negotiate
high single-digit increases from corporations, spurring them to demand the
same of the HMOs.
TA
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Wall Street Journal
October 26, 1999
Earnings Focus
Columbia/HCA Posts Small Slide
In Earnings but Tops Expectations
By LUCETTE LAGNADO
Staff Reporter of THE WALL STREET JOURNAL
Columbia/HCA Healthcare Corp., the nation's largest hospital chain,
reported a small decline in third-quarter net income, yet still beat analysts'
expectations, citing a healthy spurt in patient admissions.
Columbia, based in Nashville, Tenn., cited as key factors in its
performance a 2% increase in same-facility inpatient hospital admissions as
well as its tougher stance in dealing with health-maintenance organizations,
which resulted in more favorable contracts. Columbia's restructuring
strategy, which included selling or spinning off nearly 100 hospitals and
dumping weaker properties, also appears to have paid off, according to
both the company and Wall Street analysts.
However, Columbia, which has been in the
throes of a massive government fraud
investigation, remained tight-lipped on the
possibility of a settlement or when such a
move, whether full or partial, might occur.
Victor Campbell, the company's senior spokesman, said merely that the
company is "moving toward a resolution."
Income from continuing operations, excluding investigation and
restructuring costs, totaled $155 million, or 27 cents a diluted share, up
18% from $131 million, or 20 cents a diluted share, a year earlier.
However, net income was $138 million, a 5% decline from the year-earlier
period, when it totaled $146 million.
The company reported diluted earnings of 27 cents a share on income
from continuing operations, excluding gains on hospital sales, asset
impairment and restructuring and investigation costs. This beat the analysts'
consensus estimate of 25 cents a share, as surveyed by the First
Call/Thomson Financial. However, with the inclusion of restructuring and
investigative costs, per-share earnings came to 24 cents a share, up from
22 cents a share a year earlier.
Revenue totaled $3.9 billion, a decline from year-earlier revenue of $4.6
billion; company officials attributed the decline largely to the reduced
assets.
Mr. Campbell pointed out that while the company had unloaded 31% of its
assets, revenue was down only 15%. "It was a solid quarter," Mr.
Campbell said.
"Columbia's getting pretty high marks," said Sheryl Skolnick, an analyst
with Robertson Stephens who has been critical of Columbia's performance
in the past. "It may be the company has figured out how to operate," in the
shadow of the government inquiry, she said.
The company took pride in showcasing its ability to negotiate better
contracts with managed care, attributing this to a companywide resolve to
challenge HMOs. John Hindelong, an analyst with Donaldson, Lufkin &
Jenrette, suggested that the hospital industry had watched HMOs negotiate
high single-digit increases from corporations, spurring them to demand the
same of the HMOs. He said Columbia's greatest achievement in the
quarter was to put "the turmoil" that had plagued the company behind it
and achieve "operational stability."
Columbia shares rose 50 cents to $22.25 in New York Stock Exchange
composite trading Monday. |
