Dive Brief:
- Community Health Systems missed Wall Street expectations for earnings per share in its third quarter earnings this week, despite rising patient admissions and efforts to control labor expenses.
- The operator posted a net loss of $91 million in the third quarter, compared to net loss of $42 million from the prior year period.
- The losses come even as same facility admissions, which rose 3.7% year over year, reached their highest levels since the fourth quarter of 2019, CHS CEO Tim Hingtgen said during a Thursday morning call with investors.
Dive Insight:
The for-profit operator, which spans 76 owned or leased affiliate hospitals and more than 1,000 sites of care, has been in the red for the past three quarters.
Hingtgen blamed losses in the third quarter on the poor macroeconomic environment for hospitals. He noted that the hospital industry writ large has continued to face a challenging operating environment in the third quarter — echoing sentiments made by UHS executives earlier in the day on their own earnings call.
“Healthcare providers continue to face headwinds, including reimbursement challenges, inflationary pressures, regulatory hurdles and evolving consumer behaviors,” Hingtgen said.
Moving forward, Hingtgen said the Franklin, Tennessee-based company plans to focus on accelerating growth, strengthening its workforce, controlling expenses and advancing safety and quality.
Hingtgen expressed hope that hospital expansion projects in Knoxville, Tennessee and Foley, Alabama, which are on track for completion in 2024, will help the operator get back in the black. Once the projects are complete, CHS will have added 500 beds to its portfolio since 2018.
The operator believes that there will be demand for services. CFO Kevin Hammons said that the hospital operator is “getting back to more normal [patient] behaviors” post-pandemic.
On a same-store basis, net operating revenues increased 5.1% for the third quarter, compared to the same period last year. Same-facility adjusted admissions increased 4.2% in the third quarter, compared to the same period in 2022.
The health system had a record quarter for physician practice visits, which typically serve as a leading indicator for future procedural volumes, Hingtgen said.
The operator reported that cost saving measures introduced last quarter, including its bid to redesign workflows and standardize operations, have seen initial success. Hammons added that CHS had been able to reduce contract labor costs 10% sequentially from last quarter.
Still, the health system downwardly revised the its net operating revenue projections for the year from $12.2 billion to $12.6 billion, down from the $12.4 billion to $12.5 billion UHS projected earlier in the year.
