Finance:
PPS Changes Impact Companies' Bottom Lines
Published on Tue May 27, 2008
Consolidation continues despite new payment rules.
If you're taking a hit under the prospective payment system refinements that began Jan. 1, you're not alone.
The industry's heavy-hitting publicly traded companies reported reduced earnings for the first quarter of 2008, although the outlook isn't too grim.
LHC Group Inc. based in Lafayette, LA fared the worst with net income dipping to $5.3 million in the quarter ended March 31, down from $5.8 million during the same period in 2007, according to its earnings release. Revenues, however, rose from $68.7 million to $83.5 million during that time period.
Most of LHC's locations are in rural areas, which are the regions hit hardest by the PPS revisions. The chain's employees "faced the adversity of the new reimbursement environment head-on" during the quarter, LHC CEO Keith Myers says in the release. A loss on discontinued operations also contributed to the lower net income, LHC points out.
Meanwhile, Gentiva Health Services Inc. managed to increase net income 13 percent to $7.7 million during the quarter, compared to a $6.8 million profit in the year-ago quarter. Revenues rose from $299.5 million last year to $323.7 million in the most recent quarter.
But PPS still took a toll on the national giant. "The current impact of new PPS rules contributed to a revenue growth rate below those of recent quarters," Gentiva acknowledges in its earnings release.
Regional chain Almost Family Inc. saw net income rise a whopping 41 percent to $2.6 million, compared to $1.7 million for the same period last year. The Louisville, KY-based company reports a revenue increase of 23 percent during that time, from $31.8 million to $39.0 million in the latest quarter.
Boost: Almost Family credits its acquisition of Apex Home Healthcare in Florida with increasing its earnings.
More consolidation: LHC is also on the acquisition trail. The chain has purchased River West Home Care in Plaquemine, LA, which has Medicare revenues of about $500,000, it says.
And the company also plans to buy Home Care Solutions based in Nashville, TN. The HHA has eight locations in Tennessee and two in Virginia, which marks LHC's entry into that state.
"We plan to begin an immediate expansion of de novo locations in both states," Myers announces in a release. Home Care Solutions has $11.1 million in annual Medicare revenues, LHC says.
