Profit improves for Vegas hospital owners

Michelle Swafford

Tuesday, Oct. 21, 2003 | 11:10 a.m.

Universal Health Services Inc., owner of Spring Valley, Desert Springs, Valley and Summerlin hospitals in the Las Vegas Valley, announced Monday a profit of $47.4 million, or 76 cents per share, in the third quarter. The results were up from $41.5 million, or 65 cents per share, in the year-ago quarter.

And competitor HCA Healthcare Inc., owner of Sunrise and MountainView hospitals in Las Vegas, today announced a third-quarter profit of $306 million, or 61 cents per share. The results represent a 53 percent increase over the $200 million, or 38 cents per share, for the same period in 2002.

Despite HCA's profit for third quarter, the company announced a lower than expected full-year profit projection because of declining Medicare payments and an increase in unpaid patient bills. The full-year profit is expected to be between $2.56 and $2.60 a share excluding some costs and gains. Analysts surveyed by Thomas Financial had projected $2.80 per share.

Universal Health, based in the Philadelphia suburb of King of Prussia, reported revenue rose 10 percent to $896.3 million from $813.1 million in the year-ago quarter.

"Revenue remains strong despite no growth in admissions," said Steve Filton, chief financial officer. "There was a 1 percent decrease in admissions."

Though admissions declined slightly for the company's 25 acute care hospitals during third quarter, patient days were up slightly. Patient days measure the number of days that each bed in a hospital is occupied.

Admissions dropped to 65,628 patients in third quarter from 66,401 patients in the year-ago quarter. Patient days increased to 306,182 from 304,497.

Filton said he expects the aging population and population growth will increase admissions in the coming quarters.

Locally, the four hospitals in Las Vegas are doing well, Filton said. "The market is growing and that's why we've opened a new hospital there," he said.

Spring Valley Hospital opened a few weeks ago in the Southwest Valley. The hospital has ramped up quickly, but it's unrealistic to expect it to be profitable in its first quarter of operation, Filton said.

Tort reform in Nevada and Texas should reduce malpractice expenses in those markets, Miller said.

Locally, Universal Health employs approximately 1,377 people, which is about 13 percent more people than the same period a year ago. The company has 1,130 licensed beds in the Las Vegas Valley, up 18 percent, said Mike Marquez, vice president of acute care, Western Region for UHS.

The company said the medical malpractice crisis forced Desert Springs to discontinue its orthopedic surgery service, but other Universal Health hospitals expanded services in the third quarter. Desert Springs added two emergency room trauma rooms and Valley Hospital added two cardiac catheterization labs. Summerlin Hospital's maternity and nursery units were doubled with the addition of 28 beds, Marquez said.

Separately, Nashville-based HCA reported an 11 percent increase in revenue to $5.5 billion from $4.9 billion during the year-ago quarter.

HCA attributed the results to a 3.9 percent increase in admissions at its 183 fully owned hospitals, which includes 11 hospitals acquired in April in Kansas City, Mo., and a new hospital that opened in August.

Admissions rose to 407,700 patients in the third quarter, compared with 392,400 patients in the year-ago quarter. Patient days increased to 2 million from 1.9 million.

Locally, admissions declined slightly at MountainView Hospital, but patient days rose, meaning patients were sicker, said Rick Plummer, spokesman for the hospital.

The hospital had 3,743 patients in third quarter, compared with 3,808 patients in the year-ago quarter. Patient days increased to 16,945 from 15,495.

HCA had 900 licensed beds in the Las Vegas Valley in the third quarter, which is up from 880 beds a year ago. The increase is because of expansions at MountainView and Sunrise hospitals.

HCA is scheduled to open Southern Hills Hospital, a 130-bed hospital in the Southwest Las Vegas Valley, in February.

"I don't think you'll see dramatic growth beyond that soon, although Las Vegas is still the fastest-growing city in the country so you may see some smaller expansions in the existing hospitals themselves," said Jeff Prescott, HCA corporate spokesman.

As new hospitals open and existing hospitals expand, additional nurses are needed.

"The nursing shortage has had an impact on every hospital," Prescott said.

Although each hospital has its own recruitment efforts, HCA Healthcare does have a few corporate programs to assist its hospitals. A partnership with the U.S. Department of Labor provides $15 million for nursing scholarships. In return for the money, nurses must work at an HCA hospital for the same length of time as their nursing program. HCA also has its own nursing temporary employment agency.

Locally and nationally, uninsured patients continue to be a problem for hospitals. HCA's doubtful accounts increased 10.3 percent in the third quarter, but the hospital is looking at ways to improve the situation including more pre-registered patients.