Tenet's Bad Debt Expense Rises to $148 Million

Tenet Healthcare (NYSE: THC) said Tuesday that bad debt expense increased $15 million to $148 million in the first quarter ended March 31, 2008. But a favorable settlement with a managed care payer significantly reduced the impact of the write offs.

The Dallas-based hospital chain said bad debt expense accounted for 6.3 percent of its $2.4 billion in net operating revenues in the quarter. The increase in bad debt expense stemmed largely from growth in uninsured admissions, pricing increases, and improved charge capture in Tenet’s emergency departments.

However, the company reported those contributing factors to higher bad debt expense were partially offset by a 3.8 percent decline in uninsured outpatient visits and a settlement with a managed care payer that reduced bad debt expense by $8 million.

Tenet reported for its first quarter that high litigation and restructuring expenses pushed the hospital chain in the red. The company said it lost $31 million or 6 cents a share, compared with earnings of $75 million or 16 cents a share in the year ago period. Excluding special items, the company earned 4 cents per share. Analysts had forecast earnings of 1 cent before special items.

Tenet said it spent $47 million before taxes on ligation related to a charge for the company’s estimated liability for wage and hour lawsuits and other unrelated employment matters. The hospital chain also recorded $3 million on restructuring costs.

Despite the loss, Tenet’s president and chief executive officer said the company’s growth strategies are working, adding that admissions at hospitals open at least a year rose 1 percent during the quarter.

"The quarter represents the second consecutive quarter of positive admissions growth since early 2004," said Trevor Fetter. "And April admissions showed enhanced volume strength bringing admissions growth through the first four months of the year to 1.6 percent and moderating outpatient visits to a decline of just 0.1 percent."