Becker's Hospital Review

23 CFO / FINANCE UHS' net income up 8.6% in Q1: 4 things to know By Kelly Gooch K ing of Prussia, Pa.-based Universal Health Services saw revenues and net income increase in the first quarter of 2018 compared to the same period of the year prior. Here are four things to know about UHS' financial results. 1. UHS said revenues jumped 2.9 percent year over year to $2.7 billion in the quarter ended March 31, 2018. 2. The revenue growth was partially due to increased pa- tient admissions. At acute care hospitals owned during both periods, admissions when adjusted for outpatient ac- tivity increased 2.3 percent compared to the first quarter of 2017. At behavioral healthcare facilities on a same-facility basis, adjusted admissions increased 1.6 percent year over year. 3. UHS also saw expenses grow, from $2.3 billion in the first quarter of 2017 to $2.4 billion in the first quarter of 2018. 4. UHS ended the first quarter of 2018 with net income of $223.8 million, compared to $206.1 million in the same pe- riod of the year prior. UHS said effective in January 2018, its provision for net income was favorably affected by the federal Tax Cuts and Jobs Act of 2017, which includes a lower corporate tax rate. n Creditors seek to force 2 Arizona hospitals into bankruptcy By Ayla Ellison C reditors of Gilbert (Ariz.) Hospital and Florence (Ariz.) Hospital at Anthem are seeking to force the hospitals into bankruptcy in an attempt to collect $1.96 million they claim the affiliated hospitals owe, ac- cording to court documents. The involuntary Chapter 11 bankruptcy petition for Flor- ence Hospital — filed jointly by three employees — seeks $46,650 in wages. An unsecured creditors trust, the hos- pital's founder and CMO Timothy Johns, MD, and a Phoe- nix-based law firm filed Gilbert Hospital's involuntary bank- ruptcy petition, which seeks more than $1.9 million. This is the second time the hospitals have landed in bank- ruptcy court. The hospitals filed for voluntary Chapter 11 bankruptcy in 2014, according to court documents. In court documents filed May 1, creditors claim the hospitals have failed to make lease payments for months and that the facilities are "on the brink of complete shutdown." n Fitch identifies biggest issues facing nonprofit hospitals: 3 takeaways By Kelly Gooch U .S. nonprofit hospital and health systems face a myriad of challenges as they try to reduce costs and improve quality. Becker's Hospital Review caught up with Kevin Holloran, senior di- rector and head of Fitch's U.S. nonprofit healthcare group, to find out what he sees as the biggest issues facing these organizations, and if he expects those issues to continue. Here are three takeaways. 1. Rising expenses are offsetting revenue gains. Non- profit hospitals and health systems across the county face financial uncertainty, spurred by operating margin compression, according to Mr. Holloran. He said organizations are seeing expenses increase in areas such as nursing and supplies, particularly pharma, but more limited increase in revenues to offset those expenses. 2. Political uncertainty and hospital financial uncer- tainty are intertwined. With political uncertainty comes financial uncertainty, as well. For instance, in December Pres- ident Donald Trump signed Republicans' tax law that repeals the ACA's individual mandate to buy health insurance. Fitch believes this will cause more instability due to an increased un- insured population. 3. New players in the healthcare industry are a threat. Mr. Holloran believes the biggest uncertainty for non- profit hospitals and health systems relates to nontraditional play- ers' involvement in the healthcare space. Retail giant Walmart re- vealed March 29 it is in preliminary talks to buy health insurer Humana. Additionally, Apple plans to open primary health clinics for its own employees and their families this spring. e company also announced March 29 it expanded its iPhone's Health Records feature pilot to 39 U.S. health systems. And, Amazon revealed Jan. 30 it joined with Berkshire Hathaway and JPMorgan Chase & Co. to launch a new healthcare company. "So what does that [all] mean?" Mr. Holloran said. "I think the mes- sage to the sectors is, 'We're ready for lower costs, better quality and more access, and we're willing to do it ourselves, faster than you can.'" For healthcare providers rated by Fitch, Mr. Holloran believes non- traditional players' involvement in the healthcare space will have the most effect on the front end. He believes there will be more con- venient and instantaneous care at places like urgent care centers, or even handheld devices, rather than in physician offices or hospitals. Still, he believes the core of healthcare such as surgical procedures and treating chronic diseases "won't be Uberized." Amid uncertainty, Mr. Holloran recommends nonprofit hospitals and health systems embrace nontraditional players' efforts and ex- plore how they can benefit from those efforts or partner with the nontraditional players. He said he doesn't see the trend going away next year, or for the foreseeable future. n

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