Community Health Systems Revenue, Bad Debt More than Double as Profits Decline

Community Health Systems (NYSE: CYH) said today that its second quarter earnings fell nearly 11 percent to $47.9 million due to lower than expected reimbursements and Medicaid shortfalls in Indiana.

The Franklin, Tenn.-based hospital chain earned 50 cents a share in the period ended June 30, 2008. Analysts were expecting 57 cents a share.  A year ago, CHS earned $53.8 million, or 57 cents per share.

Income from continuing operations came in at $49.8 million or 52 cents a share, compared with $53.6 million or 57 cents in the year ago period.

CHS said revenues more than doubled to $2.7 billion during the quarter, from $1.2 billion a year ago and it set aside nearly $291 million for bad debt expense.

Although bad debt write offs in the second quarter more than doubled from $141.8 million in the year ago period, CHS’ bad debt expense as a percentage of revenue declined more than 1 percent to 10.8 percent after the company adopted new billing policies. CHS said net operating revenue from hospitals open at least one year increased almost 5 percent during the quarter.  Meanwhile, admissions from hospitals open at least a year rose 2.3 percent.

CHS’ sharp increase in bad debt and revenue was due mainly its acquisition of Triad Hospitals last July. The purchase helped make CHS the largest publicly traded hospital group in the U.S.