Increased admissions drove revenue gains for Tenet Healthcare Corporation and Community Health Systems in the first quarter of 2014 compared to 2013. Both for-profit hospital firms appear confident midway through Q2.
Despite being adversely impacted by a $25 million revenue decline related to Medicare sequestration, a $22 million EBITDA decline related to the loss of an uncapped health plan contract in Arizona, and a $12 million decline in California Provider Fee Program revenue recognition, Tenet saw an increase in revenue for the first quarter of 2014 compared to 2013.
Earlier in the week, Tenet reported an Adjusted EBITDA for the first quarter of 2014, which ended on March 31, of $387 million, an increase of $113 million, or 41 percent, as compared to $274 million in the first quarter of 2013.
[See also: Tenet files lawsuit against Community Health Systems]
Trevor Fetter, president and CEO of Tenet, said the company's hospitals saw an improvement in their admissions trend in the first quarter of the year, with a 0.3 percent increase in adjusted admissions and a 0.9 percent admissions decline on a pro forma basis, in part because of the newly insured patient populations under the Affordable Care Act (ACA).
“The strengthening volume trend was particularly pronounced in the states that expanded their Medicaid programs. In these four states, our Medicaid admissions grew by 17 percent and uninsured plus charity admissions declined by 33 percent. We leveraged this top line contribution through solid cost control to approach the top quartile of our Adjusted EBITDA Outlook range,” he said. “Our EBITDA and volume growth would have been even stronger had it not been for the adverse impact of challenging weather events in many of our markets.”
CHS expresses optimism
Meanwhile this week, Community Health Systems, based in Franklin, Tenn., announced that their first quarter of the year Adjusted EBITDA was $485 million compared with $495 million for the same period in 2013, representing a 2 percent decrease.
According to a CHS press release, the decrease in revenue this quarter compared to last year was due to the fact that CHS just completed its acquisition of Health Management Associates, Inc. (HMA) this past January. Excluding the acquisition, integration and legal expenses related to the HMA acquisition, Adjusted EBITDA was $541 million for the three months ending on March 31, 2014.
[See also: Community Health Systems acquires northeast Pennsylvania health system]
“We are pleased with our accomplishments for the first quarter of 2014 during what has been a challenging, yet significant period for Community Health Systems," said Wayne T. Smith, chairman and chief executive officer of CHS. "This is the first quarter that we have reported our combined operations with HMA, and we have been fully engaged in the integration of these additional hospitals. Overall, our results for the quarter were affected by the severe winter weather in several key markets and lower flu volumes compared with the previous year. However, we have started to see some positive trends in our operations related to the implementation of the Affordable Care Act.”
The consolidated operating results for the first quarter of 2014 also reflect a 24.7 percent increase in total admissions and a 28.4 percent increase in total adjusted admissions compared with the same period in 2013, according to the press release.
“With the completion of the HMA acquisition, we are excited about the long-term benefits for Community Health Systems and our shareholders," Smith said. "We have a significant opportunity to leverage our assets and apply our disciplined approach to providing quality healthcare in more local communities across the United States. We have already identified areas for operating improvements and believe we are making measurable progress toward achieving the synergies we have previously estimated."