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Health Management Associates Inc. Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: November 2, 2012 04:08PM
Health Management Associates Inc. (HMA) filed Quarterly Report for the period ended 2012-09-30.
Highlight of Business Operations:During the three months ended September 30, 2012, which we refer to as the 2012 Three Month Period, we experienced growth in our net revenue before the provision for doubtful accounts over the three months ended September 30, 2011, which we refer to as the 2011 Three Month Period, of approximately 19.0%. Such growth principally resulted from: (i) our acquisition of six Tennessee-based general acute care hospitals and other ancillary health care operations with a total of 882 licensed beds (collectively, the Mercy Hospitals) on September 30, 2011; (ii) our acquisition of an 80% interest in each of five Oklahoma-based general acute care hospitals with a total of 218 licensed beds and certain related health care operations (collectively, the Integris Hospitals) in April 2012; (iii) increased surgical volume attributable to physician recruitment and market service development (e.g., ambulatory surgical centers, robotic surgical systems, etc.) at certain of our hospitals and other health care facilities; (iv) an increase in emergency room visits, which we believe was attributable, in part, to our dedicated focus on emergency room operations; and (v) improvements in reimbursement rates that resulted primarily from renegotiated agreements with certain commercial health insurance providers. During the 2012 Three Month Period, we recognized a benefit of approximately $24.2 million from the meaningful use measurement standard under various Medicare and Medicaid Healthcare Information Technology incentive programs (collectively, the HCIT Programs), as compared to a $1.7 million benefit during the 2011 Three Month Period. The timing of our recognition of benefits under these programs correlates to the availability of program funding and our achievement of the related incentive criteria. Items that adversely affected our profitability during the 2012 Three Month Period included increases in interest expense (principally non-cash charges), costs associated with government investigations and depreciation and amortization. Overall, our year-over-year income from continuing operations was effectively unchanged.
We have also taken steps that we believe are necessary to achieve industry leadership in patient safety and quality. Our goal is to be the highest rated health care provider of any hospital system in the country, as measured by Medicare. With our knowledgeable and experienced clinical affairs leadership supporting this critical quality initiative, we measure key performance objectives, maintain accountability for achieving those objectives and recognize the leaders whose quality indicators and clinical outcomes demonstrate improvement. As most recently reported by the Centers for Medicare and Medicaid Services, all four of our core measure care areas (i.e., myocardial infarction, congestive heart failure, pneumonia and surgical care improvement project) have dramatically improved since the commencement of our clinical quality initiatives and we now rank second in core measures amongst large for-profit hospital systems. Additionally, The Joint Commission, a leading independent not-for-profit organization that accredits and certifies health care organizations in the United States, recently named 64% of our hospitals as Top Performers on Key Quality Measures, which compared to a nationwide achievement rate of approximately 18%. Moreover, 77% of our hospitals that were top performers during 2010 were once again recognized by The Joint Commission this year based on 2011 quality performance statistics. To determine top performers, The Joint Commission aggregates certain evidence-based accountability data, including core measurement performance data.
Net revenue before the provision for doubtful accounts during the 2012 Three Month Period was approximately $1,664.2 million as compared to $1,398.5 million during the 2011 Three Month Period. This change represented an increase of $265.7 million, or 19.0%. Our same three month hospitals contributed $78.5 million, or 29.5%, of the increase in net revenue before the provision for doubtful accounts. The same three month hospital increase was primarily the result of: (i)
Net revenue before the provision for doubtful accounts during the 2012 Nine Month Period was approximately $5,037.2 million as compared to $4,220.7 million during the 2011 Nine Month Period. This change represented an increase of $816.6 million, or 19.3%. Our same nine month hospitals contributed $269.0 million, or 32.9%, of the increase in net revenue before the provision for doubtful accounts. The same nine month hospital increase was primarily the result of: (i) increased outpatient and surgical volume from physician recruitment and market service development; (ii) an increase in
Our provision for doubtful accounts during the 2012 Nine Month Period increased 30 basis points to 12.7% of net revenue before the provision for doubtful accounts as compared to 12.4% of net revenue before the provision for doubtful accounts during the 2011 Nine Month Period. This change was primarily due to an increase in revenue from uninsured self-pay patients and amounts considered to be patient responsibility (e.g., deductibles, co-payments, other amounts not covered by insurance, etc.). During the 2012 Nine Month Period and the 2011 Nine Month Period, our Uncompensated Patient Care Percentage, which is described above under the heading 2012 Three Month Period Compared to the 2011 Three Month Period, was 27.4% and 25.6%, respectively. This 180 basis point increase during the 2012 Nine Month Period primarily reflects greater uninsured self-pay patient revenue discounts.
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