In the fourth quarter ended June 30, net income at Nashville, Tenn.-based Vanguard Health Systems dropped 25 percent to $14.5 million, but its year-end earnings still improved from 2012.
For the year, Vanguard's profit increased 8 percent, from $57.3 million to $61.9 million. Total revenue in the fourth quarter swelled 4.3 percent to $1.52 billion, and total revenue in Vanguard's 2013 fiscal year fell just shy of $6 billion, a 0.8 percent bump from the year prior. Adjusted EBITDA on the year was $555.5 million, compared with $575.7 million in 2012.
Vanguard executives attributed the lower earnings in the fourth quarter to a positive tax rate change in Michigan last year, while the higher year-end profit was attributed to last year's industry settlement with HHS and CMS. That settlement compensated 2,200 hospitals that were underpaid from the Medicare inpatient prospective payment system from 1999 to 2011.
In the fourth quarter, Vanguard's same-hospital operating statistics were almost down across the board. Discharges, inpatient surgeries and outpatient surgeries dropped 3.3 percent, 0.5 percent and 2.7 percent, respectively. Those three categories were also down for the entire year across Vanguard's 28 hospitals, but observation cases were up 6.6 percent year-over-year.
In June, Vanguard made ripples throughout the hospital industry when it signed a definitive agreement to merge with Dallas-based Tenet Healthcare Corp. in a transaction valued at $4.3 billion. The Tenet-Vanguard deal would create a 79-hospital system, but that figure could grow larger considering pending deals in Connecticut.
In a call with investors after the deal was announced, Tenet President and CEO Trevor Fetter said the move "will take Tenet into new geographic markets, expand the breadth of our service offerings, diversify our earnings sources and increase the benefits we expect to realize under healthcare reform."
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