Hospital Volumes Fall in April, Soft Q2 Forecasted

Patient volumes at the nation's acute care hospitals fell slightly in April, and are expected to be weak into the second quarter of 2010, according to the Deutsche Bank Hospital Volume Tracker.

Deutsche Bank's survey of more than 375 acute care hospitals found inpatient volumes down 2.2% and outpatient volumes down 1.1% for April. Inpatient surgeries were up 3%, outpatient surgeries were up 3.5%, and births were up 1.1%. ER visits fell 1.8%

"Uninsured mix looks fairly stable on a sequential basis, thus alleviating concerns about short-term bad debt volatility, although we are going to have to keep a close eye on MCO mix given steeper inpatient declines in recent months," the report stated.

Deutsche Bank said inpatient MCO volume declines are down about 5% on a rolling three-month basis. "This trend could be an indication that COBRA is beginning to roll-off, although we emphasize that we are not seeing corresponding growth in the uninsured volume," the report said.

Deutsche Bank anticipated Q2 volume growth of between 1% and 2%. "We believe our models have cushion in them with respect to conservative bad debt assumptions. We'll reassess volume, pricing and bad debt assumptions once we've gained a fuller picture on Q2 trends in the coming weeks," the report said.

Despite the soft volumes, Deutsche Bank said it will continue its Buy ratings on the major investor-owned hospitals, including Community Health Systems, Health Management Associates, Inc., LifePoint Hospitals, Inc., Tenet Healthcare Corp., and Universal Health Services, Inc., "based on reasonable valuations, upside risks associated with healthcare reform, accretive acquisitions, the potential for better volume and mix with an economic recovery, and continued execution with expense management over the short-run."