Bad Debt Hits Community Health Hard in Q3

by Mike Bevel, CollectionIndustry.com

Despite a 21 percent increase in revenue, bad debt expense is taking a toll on Community Health System?s third quarter earnings.

The Brentwood-based hospital chain posted a profit of $8.2 million, or 9 cents per diluted share, in the quarter ended Sept. 30, an 81 percent decline from the third quarter a year ago. Revenues for the quarter increased 21 percent to $1.12 billion.

Bad debt expense increased up to $192 million in the quarter from $93 million in the third quarter last year. As a percentage of revenue, bad debt was 17 percent compared to 10 percent in the year-ago period. Overall, operating expenses increased 30 percent to $1.1 billion from $833 million in the third quarter last year.

Community Health officials said through a release announcing the quarter’s results that the company saw a “significant increase in self-pay volume and related revenue, combined with lower cash collections” during the quarter. That trend is driven by an increase in the number of uninsured patients its hospitals are treating and higher deductible and co-payments for patients who have insurance.