HCA profits plunge

Friday, August 3, 2007 at 2:02am

The cost of buying the nation’s largest hospital chain can evidently put a dent in profits.

Nashville-based HCA Inc., the largest U.S. hospital chain, said Thursday that second-quarter earnings fell 61 percent because of costs to finance its $33 billion leveraged buyout.

Net income dropped to $116 million from $295 million a year earlier, the company said in a statement. Revenue increased 5.8 percent to $6.7 billion.

Interest expense rose to $557 million from $196 million a year earlier, due to the buyout. The company reported the same interest expense in the first quarter, when profits fell 53 percent to $180 million.

Hospital admissions dropped 1.8 percent from a year earlier. Admissions of uninsured and charity-care patients rose 9.9 percent, and discounts on bills for those patients rose to $709 million from $588 million in the same quarter of 2006.

HCA shareholders in November approved a leveraged buyout that paid them $51 per share. Buyers for the chain were a group that included Bain Capital, Kohlberg Kravis Robert & Co. and Merrill Lynch Global Private Equity.

The deal also involved $16 billion in new debt and the assumption of $11.7 billion in existing debt.

HCA completed the sale in July of two hospitals in Geneva, Switzerland, for about $394 million, which went toward paying European debt.

HCA operates 172 hospitals and 107 walk-in surgery centers in 20 U.S. states as well as in Europe.

HCA was originally founded by Dr. Thomas Frist Sr. in 1968 when he and several other doctors and businessmen, including his son Dr. Thomas Frist Jr. and Jack C. Massey, formed a company to manage Park View Hospital.

After a merger with Columbia in 1994, HCA reached a peak of more than 350 hospitals, 145 outpatient surgery centers, 550 home care agencies and several other associated businesses, as well as 285,000 employees, according to HCA’s website.

HCA has since sold its non-hospital businesses. Locally, HCA owns Centennial Medical Center; Centennial Surgery Center; Skyline Medical Center and Southern Hills Medical Center in Nashville.

HCA also owns Hendersonville Medical Center, Summit Medical Center and Summit Surgery Center in Hermitage; and StoneCrest Medical Center in Smyrna, according to the company’s website.

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