IHCH Admissions Decline Update
Here is some data to help understand my concern over the decline in admissions and its impact on valuation and forward look on the changes with Obamacare. The numbers are directly from the Annual and most recent quarter report (in thousands):
FY2006 - 27.5* - Baseline post acquisition by IHCH from Tenet Healthcare
FY2007 - 27.8
FY2008 - 28.0 - Peak Admissions prior to onset of Great Recession
FY2009 - 26.8 - 4.3% drop
FY2010 - 25.6 - 4.5% drop, Bankruptcy Filed in Fall
FY2011 - 23.1 - 9.7% drop, Emerged from Bankrupcty with Chaudhuri recognized majority ownership
FY2012 - 21.3 - 7.8% drop
FY2013 - 20.2 - 5.2% drop
2014Q1 - 4.7 - Drop of 7.8% for Q1 compared to 5.1 in Q1 of 2013
2014Q2 - 4.9 - Drop of 5.8% for Q2 compared to 5.2 in Q2 of 2013
*Note: The FY2006 number is derived from the FY2007 10-K report from the statement "Inpatient admissions increased only slightly by 1.1% to 27,806 in the year ended March 31, 2007."
If the rate for FY2014 remains at current trend, the full year may operate at 18.8 (estimated on 6.8% decrease for 6 months). That estimate puts the decline since FY2008 at 32.9%.
A bottom to the decline is still not in evidence and current/future CMS policy and impact of Obamacare is placing added doubt on admissions trend (IMO).
