Franklin, Tenn.-based Community Health Systems is still waiting longer for insurers to pay its claims, but the slowdown has not worsened, CFO Jason Johnson said on the system’s Oct. 29 third-quarter earnings call.
In July, Mr. Johnson said insurers were auditing more claims before paying them and asking for more records. Payers used to run those audits after payment. He said CHS’s accounts receivable was growing as a result. He called it a timing issue rather than a collection problem and said the system would return to a normal run rate once it anniversaried the change.
“It has not worsened. We continue to see a slowdown in the payment of claims,” Mr. Johnson said on the Oct. 29 call. “No worse than it was in the first quarter when we really first started seeing that shock. But it has not changed either. Our days in A/R are consistent from [June 30 to Sept. 30], so we have kind of maintained.”
CHS’s cash flow improved in the third quarter despite the slowdown. Cash generated from operations was $168 million, excluding taxes on divestiture gains, up from $121 million a year earlier. On a reported basis, it rose to $155 million from $70 million. Mr. Johnson credited better management of accounts payable and continued collection of accounts receivable, including the timing of state-directed payments.
CHS, which now operates 59 hospitals, posted an $86 million net loss in the third quarter, compared with $130 million in net income a year earlier. Net operating revenue fell 11% to $2.8 billion as divestitures shrank the system’s portfolio, though same-store revenue rose 3.8%.
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