Printer Friendly

COMMUNITY PSYCHIATRIC CENTERS COMMENTS ON NEAR-TERM OUTLOOK

    COMMUNITY PSYCHIATRIC CENTERS COMMENTS ON NEAR-TERM OUTLOOK
    LAGUNA HILLS, Calif., Nov. 4 /PRNewswire/  -- Citing adverse publicity on the psychiatric hospital industry stemming from investigations being conducted in several states against an industry competitor, as well as significant industry changes caused by the growing impact of managed care, Community Psychiatric Centers (NYSE: CMY) today announced that patient days have continued to decline from third quarter levels in the fourth quarter of fiscal 1991.  Based on patient utilization data since Sept. 1, patient census is off 10 to 12 percent, admissions have dropped 6 to 8 percent, and average length of stay has declined against year-earlier comparisons.
    Discounted business with managed care organizations, which negotiate reduced rates with hospitals and typically reduce the average length of a patient's stay, has increased as a percentage of the company's net revenues from 22 percent in 1990 to approximately 35 percent in 1991.  Admissions growth had been slowing primarily as a result of the weak economy and tighter utilization review controls, and has been greatly exacerbated in the fourth quarter by the aforementioned negative media coverage.
    As a result of the increase in accounts receivable at the end of the third quarter the company in conjunction with its independent auditors, Ernst & Young, conducted a detailed review of accounts receivable during the month of October.  This review disclosed that the significant increase in admissions (16 percent) during the first two quarters coupled with increased volume and complexity of managed care contracts overburdened the hospitals' patient business operations resulting in a slowdown in billing and collection activity.  This slowdown was responsible for the deterioration in the aging and increase in days of revenue in accounts receivable at Aug. 31, 1991.  Based upon the results of this review, the company and Ernst & Young have concluded that an additional reserve of $14 million is sufficient to provide for all anticipated losses in accounts receivable at Sept. 30, 1991.  This amount will be reflected in the company's fourth quarter results.
    "The downward pressures on pricing and length of stay by third party payers are fueling a consolidation of the psychiatric hospital industry," said James W. Conte, chairman and chief executive officer. "In view of these recent negative industry trends, we have tabled our acquisition plans," Conte continued. "We would only consider acquisition candidates that offer extraordinary value to our company from a price or strategic marketing perspective. "Today's more difficult environment makes it more prudent at this time to invest in our own company," he added.  "The company has received authorization from its Board of Directors to purchase its own shares from time to time on the open market."
    CPC also announced that President Richard L. Conte has assumed responsibility for CPC's California hospital operations.  "With 15 hospitals and more than a quarter of our beds in the highly- competitive California market, it is critical to increase our management focus on this state, particularly since this is where the majority of our bad debts have occurred," said James Conte.
    Several additional steps have been taken to strengthen corporate management.  Jack H. Lindheimer, MD, a psychiatrist and member of CPC's board of directors, has been appointed to the new post of corporate medical director.  He will focus on strengthening the company's utilization review function, physician recruitment and program development and enhancement.  The company is also in the process of recruiting a full-time chief financial officer, establishing a utilization review department, an internal audit department and a national accounts receivable department, all of which are aimed at improving control of accounts receivable.  As an additional effort to provide more timely and effective management information in a more complex reimbursement environment, the board also granted approval for the purchase of a new computer system designed by Perot Systems Corp.
    For the first nine months of fiscal 1991, the company's revenues, earnings and earnings per share totalled $311.2 million, $48.3 million and $1.04, respectively.  These results include the impact of a $23-million pre-tax charge to increase accounts receivable reserves in the third quarter.  Community Psychiatric Centers owns and operates 50 acute psychiatric hospitals with approximately 5100 beds in the United States and United Kingdom.  The company's stock is traded on the New York, Boston, Midwest and Pacific Stock Exchanges.
    -0-                 11/4/91
    /CONTACT:  Suzanne Hovdey of Community Psychiatric Centers, 714-831-1166/
    (CMY) CO:  Community Psychiatric Centers ST:  California IN:  HEA SU: JT-EH -- LA006 -- 0581 11/04/91 09:02 EST
COPYRIGHT 1991 PR Newswire Association LLC
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1991 Gale, Cengage Learning. All rights reserved.

Article Details
Printer friendly Cite/link Email Feedback
Publication:PR Newswire
Date:Nov 4, 1991
Words:739
Previous Article:CISTRON REPORTS A PROFIT FOR FISCAL YEAR
Next Article:MOTOROLA ADDS NEW HIGH-PERFORMANCE, LOW-COST MICROPROCESSORS TO 68000 FAMILY; AND UNVEILS 3.3-VOLT INTEGRATED MICROPROCESSOR
Topics:


Related Articles
COMMUNITY PSYCHIATRIC CENTERS ANNOUNCES FIRST QUARTER EARNINGS AND SETTLEMENT WITH ONTARIO (CANADA) HEALTH INSURANCE PLAN
COMMUNITY PSYCHIATRIC CENTERS ANNOUNCES SECOND QUARTER FINANCIAL RESULTS
COMMUNITY PSYCHIATRIC CENTERS ANNOUNCES THIRD QUARTER FINANCIAL RESULTS
COMMUNITY PSYCHIATRIC CENTERS ANNOUNCES FOURTH QUARTER AND YEAR-END RESULTS
COMMUNITY PSYCHIATRIC CENTERS PROJECTS FIRST QUARTER LOSS
COMMUNITY PSYCHIATRIC CENTERS ANNOUNCES FIRST QUARTER FINANCIAL RESULTS AND RESTRUCTURING CHARGE
COMMUNITY PSYCHIATRIC CENTERS REPORTS IMPROVED THIRD QUARTER FINANCIAL RESULTS
COMMUNITY PSYCHIATRIC CENTERS REPORTS THIRD QUARTER FINANCIAL RESULTS
THC'S FIRST PROFITABLE QUARTER HIGHLIGHTS COMMUNITY PSYCHIATRIC CENTERS' EARNINGS REPORT; COMPANY ACHIEVES RECORD REVENUES IN FISCAL 1994
COMMUNITY PSYCHIATRIC CENTERS REPORTS INCREASE IN FIRST QUARTER EPS TO $0.14 FROM $0.01 IN 1994

Terms of use | Copyright © 2017 Farlex, Inc. | Feedback | For webmasters