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LHC Group Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: November 9, 2011 04:17PM
LHC Group (LHCG) filed Quarterly Report for the period ended 2011-09-30.
Highlight of Business Operations:As detailed in the tables below, total organic home-based revenue for the three months ended September 30, 2011 decreased 10.0% compared to the three months ended September 30, 2010, while organic Medicare revenue decreased 11.7%. The primary cause for the decrease in organic revenue in the home-based segment was the CMS rule for 2011, which reduced Home Health Medicare rates by 5.2%. Patient acuity also decreased by 2.5% during the three months ended September 30, 2011. This reduction was offset by growth in home health commercial revenue and in hospice net service revenue.
The primary costs of delivering care to our patients are personnel cost, which remained relatively the same in the three months period ended September 30, 2011 and 2010. However, net service revenue in the home-based services segment was reduced in 2011 by the 5.2% CMS rate cut resulting in an increase in cost of service revenue as a percentage of net service revenue.
Net service revenue increased by $11.7 million during the nine months ended September 30, 2011. The effect of the CMS rule for 2011 that reduced home health Medicare rates by 5.2% was offset by a 4.3% increase in average census in our home-based segment and a 2.9% increase in average patient days in our facility-based segment.
At September 30, 2011, our allowance for uncollectible accounts, as a percentage of patient accounts receivable, was approximately 12.1%, or $10.8 million, compared to 10.9% or $9.8 million at December 31, 2010. Days sales outstanding as of September 30, 2011 and December 31, 2010 was 47 days and 44 days, respectively. Our calculation of days sales outstanding is derived by dividing our ending net patient accounts receivable (i.e., net of estimated revenue adjustments and allowance for doubtful accounts) at September 30, 2011 and December 31, 2010 by our average daily net patient revenues for the three months period ended September 30, 2011 and December 31, 2010, respectively.
Hospice payments are also subject to an inpatient cap and an overall payment cap. The inpatient cap relates to individual programs receiving more than 20% of its total Medicare reimbursement from inpatient care services. The overall payment cap relates to individual programs receiving reimbursements in excess of a cap amount, which is calculated by multiplying the number of beneficiaries receiving services during the period by a statutory amount that is indexed for inflation. The determination for each cap is made annually based on the 12-month period ending on October 31 of each year. We monitor our limits on a provider-by-provider basis. While historically we have not exceeded these caps, our revenue could be affected if we exceed the cap limits in the future.
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