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Uninsured, cost-cutting hit HCA’s profits

Diantha Parker Oct 20, 2006

KAI RYSSDAL: The Hospital Corporation of America reported a 14 percent drop in profits today. HCA blamed an increase in the number of uninsured patients. And the growth of outpatient care. Profit margins for hospitals are usually pretty thin anyway. And, Diantha Parker reports now from Chicago, revenue streams like hospital stays are drying up.

DIANTHA PARKER: HCA is the country’s largest for-profit hospital chain. But to explain the ebb in cash flow the company points to two hikes it made across its nearly 300 facilities to care for patients who can’t pay.

Discounts for uninsured people went up 15%, to $227 million. And the company set aside 10% more money this quarter for costs associated with unpaid bills — to the tune of $677 million.

But some experts think HCA’s problem is patients who have insurance. James Unland of the Journal of Heath Care Finance, says more and more this preferred clientele are choosing private surgery practices instead. They can get more personal, and often cheaper, care.

JAMES UNLAND: All advances have moved in favor of less-invasive procedures, outpatient procedures. Doctors are trying to build surgicenters and take more control over medical episodes, especially episodes that they can treat on an ambulatory outpatient basis.

Unland says the hospital industry always had high overhead costs and a thin profit margin.

Dr. Jay Wolfson teaches health care and finance at the University of South Florida. He says that will continue.

JAY WOLFSON: The treatment of patients, the kinds of people who come into hospitals, is going to continue to change.

That could mean hospitals seeing thinner margins for years to come.

In Chicago, I’m Diantha Parker for Marketplace.

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