* Admissions decline 5.9 percent in first quarter
* Echoes trend at other hospital operators
* Shares edge up slightly after hours
By Susan Kelly
April 29 Hospital operator Community Health
Systems Inc reported slightly higher first-quarter net
income on Monday, but trimmed the top of its projected range for
full-year earnings, citing a more challenging operating
environment for healthcare providers.
Community Health, the second-largest U.S. for-profit
hospital chain, said admissions declined 5.9 percent in the
quarter, compared with a year earlier. The drop reflected a slow
start to the year, something also seen at other hospital chains.
Hospital groups HCA Holdings Inc and Health
Management Associates Inc both warned that admissions
were weak in the first quarter.
Lower patient volumes reflect a still-soft economy with high
unemployment, while consumers with private insurance are
adjusting to higher deductibles and other out-of-pocket
expenses, said Jefferies analyst Brian Tanquilut.
"Consumers are having to think twice about using healthcare.
You are seeing fewer unnecessary procedures, because people have
more skin in the game," Tanquilut said.
Community Health's chief executive, Wayne Smith, said the
company is managing its cost structure for the volatile
conditions as the industry steers toward full implementation of
healthcare reform. He said he believes hospitals ultimately will
benefit from insurance coverage expansion and potential
improvement in patient volumes.
Community, which recently announced a strategic alliance
with the Cleveland Clinic, is looking for more ways to partner
with healthcare providers with the aim of improving care and
access to services while reducing costs, Smith said.
"We have continued to identify unique opportunities for
collaboration in order to develop solutions that meet the
demands of the changing healthcare landscape," Smith said in a
Community Health, based in Franklin, Tennessee, forecast
full-year 2013 earnings from continuing operations of $3.50 to
$3.80 per share. The company previously estimated the top end of
the range at $3.90 per share.
Analysts, on average, were forecasting 2013 earnings of $3.71
per share, according to Thomson Reuters I/B/E/S.
First-quarter net income was $79.2 million, or 86 cents a
share, up from $75.5 million, or 85 cents a share, a year
earlier. Net operating revenue rose 0.4 percent to $3.31
Analysts on average had expected first-quarter revenue of
Community Health shares, which closed at $45.09 on Monday on
the New York Stock Exchange, were trading at $45.59 after hours.
CRT Capital Group analyst Sheryl Skolnick said investors
were expecting a weaker first quarter.
"The earnings could have been a whole lot worse without good
cost controls given the volume pressure the company
experienced," Skolnick said in a note to clients.