S. Nevada hospital operators’ profit rises

Michelle Swafford

Thursday, July 28, 2005 | 11:15 a.m.

Two Southern Nevada hospital operators reported strong profitability.

Universal Health Services Inc., owner of Valley, Desert Springs, Summerlin and Spring Valley hospital medical centers, reported Thursday that it nearly tripled its income in the second quarter.

Separately, IASIS Healthcare LLC -- owner of North Vista Hospital in North Las Vegas -- today reported a profit in its third quarter fiscal year after reporting a year-ago loss.

Universal's net income rose to $146.5 million, or $2.34 per share, in the second quarter from $48.3 million, or 78 cents per share, in the year-ago period.

Universal's profit included several one-time gains from the sale of some of its hospitals such as a $108.3 million after-tax boost from the sale of its majority ownership in 14 French hospitals and a $1.5 million after-tax gain from the sale of two Louisiana hospitals and one Puerto Rico hospital.

Excluding the hospital sale gains, Universal's profit dropped 18 percent to $38.2 million, or 64 cents per share.

Thomson Financial Network surveyed 23 analysts who expected Universal to earn 75 cents per share.

Universal's revenue rose 9 percent to $990.9 million in the second quarter from $905.5 million a year ago.

Universal used some of its hospital sales revenue to pay off $87 million in debt and to purchase about 2.7 million shares, or $156 million, of its stock at an average share price of $59.

At the end of the second quarter, Universal owned 23 acute care hospitals and 44 behavioral health hospitals.

Patient admissions at Universal's acute care hospitals that it owned for at least one year rose 2.7 percent in the second quarter from a year ago, but markets such as McAllen, Texas, were hampered by hefty competition.

Universal does not report local patient admissions, but Universal Chief Financial Officer Steve Filton told investors, analysts and media today that admissions rose by the greatest percentage in Las Vegas.

He said the Las Vegas hospitals are doing well, especially at Spring Valley, which opened in October 2003, and at Summerlin, where capacity was added in 2004.

Acute care hospital revenue for hospitals owned for at least one year rose 6.6 percent in the second quarter from a year ago.

The company said it was hurt by an increased number of uninsured patients, which increased the amount of uncompensated care that was provided. Universal increased its provision for doubtful accounts -- bills it will likely write off -- to $95.5 million from $74.2 million a year ago.

Universal provided $75 million in charity care in the second quarter, compared with $62 million a year ago, Filton said.

The first quarter was more stabilized and the spike in free care was attributed to a variety of factors in different markets.

For example, in McAllen, hospital competition has taken many of the paying patients, leaving uninsured patients at the Universal-owned hospital, Filton said.

In Las Vegas, the number of uninsured patients being treated at Universal-owned hospitals increased because of local market dynamics, Filton said.

"It's the nature of health benefits in that market, the nature of small businesses that don't provide coverage," he said, adding that Las Vegas has some of the lowest unemployment rates but a lot of working uninsured patients.

"Las Vegas is a market that has been a bad debt pressure point for some time," Filton said. "We've seen the bad debt rise in some other markets as well."

At Universal's behavioral health hospitals owned for at least a year, patient admissions rose 7.6 percent in the second quarter from a year ago. Revenue at those hospitals increased 9.4 percent.

In Las Vegas, Universal also owns Spring Mountain Treatment Center, two outpatient surgery centers and land in the northwest for a fifth hospital.

Universal broke ground on Centennial Hills Hospital Medical Center on July 18 in the northwest part of the Las Vegas Valley, at Durango Drive and Deer Springs Way.

The 354,000-square-foot hospital is scheduled to open in late 2006 or early 2007 with 171 private beds.

At Summerlin Hospital Medical Center, a pediatric emergency room opened in May and a pediatric intensive care unit is scheduled to open in September.

A second cardiac catheterization lab is scheduled to be available in September.

Spring Valley Hospital Medical Center started construction Monday on a 34-bed inpatient rehabilitation department in 26,000 square feet of unused space on the third floor.

In August, it will break ground on a 60,000-square-foot medical office building, which will complement the first medical office building and hospital services.

During the second quarter, Desert Springs added a 16-slice computed-tomography (CT) scanner to its radiology department.

Construction continues on a cardiac progressive care unit with general and intermediate services and a chest pain observation area, all of which is scheduled to open later this year. The hospital also is adding a peripheral vascular disease screening and diagnostic center, which is scheduled to open near the end of the third quarter.

At Valley Hospital Medical Center, construction is ongoing on the women's services department, which is adding two labor-delivery-recovery rooms, bringing the total to 11 beds.

Valley is also relocating its well-baby nursery to make separate its level-two and level-three nurseries, which care for critically ill babies.

IASIS reported its net income rose to $10.5 million in the third quarter of its fiscal year from $56 million a year ago.

The Franklin, Tenn.-based company attributed last year's loss to early repayment of $51.9 million in debt and $19.8 million in merger expenses. Both of those expenses were related to Texas Pacific Group's acquisition of IASIS.

Revenue increased 9 percent to $390 million in the third quarter from $353.3 million a year ago.

Patient admissions decreased nearly 5 percent, while patient revenue increased 7.7 percent.

In North Las Vegas, IASIS is renovating and expanding many aspects of North Vista, which IASIS purchased in February 2004.

So far, IASIS has invested more than $15 million in North Vista, IASIS spokeswoman Tomi Galin said.

"We're beginning to see good return on those investments," she said. "We're very pleased with North Vista. We feel good about what we've put into it and what we're getting out of it."

This month, North Vista opened a $500,000 wound care center with three hyperbaric chambers.

Last month the hospital opened the first phase of its $9.6 million women's center. The second phase -- an expansion of labor-delivery suites and the addition of six level-two nursery beds -- is under construction and is scheduled to be completed in mid-October.