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Hospitals’ cost cutting pays off despite fewer patients

The Tennessean, July 30, 2010

Over the past year and a half, keeping costs in check has helped the large hospital chains based in the Nashville area to increase quarterly earnings, even when seeing fewer patients come through their doors. The recent second quarter was no different. Cost controls fueled an 18% increase in net income at Franklin-based Community Health Systems, despite a decline in the number of patients. HCA Inc. saw fewer inpatient visits, and higher interest expense kept its pre-tax profits flat. But the Nashville-based industry leader reported an increase in overall volumes, including outpatient visits and improvements in its operating margins. Shares of publicly traded hospital chains fell ahead of the second-quarter earnings-reporting season that started this week. Reasons included investors' concern about weak patient volumes and the possibility of an increase in uninsured patients because Congress has not extended a program that has paid for 65% of the costs of COBRA health insurance for the unemployed.