Community Health Systems 2015 Annual Report Download - page 75

Our net operating revenues for the year ended December 31, 2015, increased $798 million to approximately
$19.4 billion compared to approximately $18.6 billion for the year ended December 31, 2014. Our provision for
bad debts increased to $3.127 billion, or 13.9% of operating revenues (before the provision for bad debts) for the
year ended December 31, 2015, from $2.922 billion, or 13.6% of operating revenues (before the provision for
bad debts) for the year ended December 31, 2014. Included in the increase to the provision for bad debts is a
$169 million change in estimate recorded during the fourth quarter of 2015. This increase resulted from an
increase in uncollectible accounts and other unfavorable trends noted during the fourth quarter. We believe the
increase in uncollectible accounts is the result of slightly lower benefits from healthcare reform compared to
what was previously estimated and a deterioration in the quality of certain categories of self-pay accounts being
pursued for collection by our in-house collection agency. These specific categories of self-pay accounts include
decreases in collections of deductibles and co-pays, increases in personal bankruptcies, and declines in the
growth of scheduled time payments.
We had income from continuing operations before noncontrolling interests of $295 million during the year
ended December 31, 2015, compared to $260 million for the year ended December 31, 2014. Income from
continuing operations before noncontrolling interests for the year ended December 31, 2015 included an after-tax
charge of $10 million for loss from early extinguishment of debt, $1 million after-tax expense for acquisition and
integration expenses from the HMA merger, $3 million after-tax expense for government legal settlements for
several qui tam matters settled in principle and related legal expenses, $41 million after-tax expense for the
impairment of long-lived assets, an after-tax charge of $5 million from fair value adjustments related to the HMA
legal proceedings, accounted for at fair value, underlying the CVR agreement and related legal expenses, an
after-tax charge of $10 million related to costs incurred for the planned spin-off of QHC and $108 million after-
tax charge related to the increase in the provision for bad debts as discussed above. Income from continuing
operations before noncontrolling interests for the year ended December 31, 2014, included an after-tax charge of
$45 million for loss from early extinguishment of debt, $43 million after-tax expense for acquisition and
integration expenses from the HMA merger, an after-tax charge of $47 million for the acceleration of
amortization on software to be abandoned, an after-tax charge of $25 million for impairment of software costs
taken out of service, and an after-tax charge of $64 million for the government settlement and related costs in
connection with the agreement in principle to settle claims at our New Mexico hospitals. These after-tax charges
were partially offset by an after-tax income of $3 million from fair value adjustments, net of legal expenses,
related to the HMA legal proceedings underlying the CVR agreement. Consolidated inpatient admissions for the
year ended December 31, 2015, increased 1.7%, compared to the year ended December 31, 2014, and
consolidated adjusted admissions for the year ended December 31, 2015, increased 3.5%, compared to the year
ended December 31, 2014. Same-store inpatient admissions for the year ended December 31, 2015, decreased
1.8%, compared to the year ended December 31, 2014, and same-store adjusted admissions for the year ended
December 31, 2015, increased 0.3%, compared to the year ended December 31, 2014.
Self-pay revenues represented approximately 12.3% and 13.0% for the years ended December 31, 2015 and
2014, respectively. During 2015, we experienced a decline in self-pay admissions and adjusted admissions
resulting in a corresponding decline in self-pay revenues as a percentage of total net operating revenues. This
decrease is reflective of an increase in Medicaid admissions and revenues, primarily in Medicaid expansion
states, as a result of the implementation of the Patient Protection and Affordable Care Act, as amended by the
Health Care and Education Reconciliation Act of 2010, collectively, the Reform Legislation. The reduction in
self-pay admissions and revenue was also experienced in non-expansion states, although to a lesser degree. The
amount of foregone revenue related to providing charity care services as a percentage of net operating revenues
was approximately 2.3% and 3.0% for the years ended December 31, 2015 and 2014, respectively. Direct and
indirect costs incurred in providing charity care services were approximately 0.3% and 0.5% for the years ended
December 31, 2015 and 2014, respectively.
The U.S. Congress and certain state legislatures have introduced and passed a large number of proposals and
legislation designed to make major changes in the healthcare system, including changes that increased access to
health insurance. The Reform Legislation mandates that substantially all U.S. citizens maintain medical
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