HCA Holdings 2011 Annual Report Download - page 80

HCA HOLDINGS, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS — (Continued)
Results of Operations (Continued)
Years Ended December 31, 2010 and 2009 (Continued)
declined 1.4% during 2010 compared to 2009. Consolidated outpatient surgical volumes declined 1.4%, and same
facility outpatient surgeries declined 1.2% during 2010 compared to 2009. Emergency room visits increased 2.0%
on a consolidated basis and increased 2.1% on a same facility basis during 2010 compared to 2009.
Revenues before provision for doubtful accounts increased 2.1% to $30.683 billion for 2010 from
$30.052 billion for 2009. Provision for doubtful accounts declined $628 million from $3.276 billion in 2009 to
$2.648 billion in 2010. With our adoption of ASU 2011-07, the provision for doubtful accounts has been
reclassified from an operating expense to a deduction from patient service revenues. The provision for doubtful
accounts and the allowance for doubtful accounts relate primarily to uninsured amounts due directly from
patients, including copayment and deductible amounts for patients who have health care coverage. The decline in
the provision for doubtful accounts can be attributed to the $1.892 billion increase in the combined self-pay
revenue deductions for charity care and uninsured discounts during 2010, compared to 2009. The self-pay
revenue deductions for charity care and uninsured discounts increased $186 million and $1.706 billion,
respectively, during 2010 compared to 2009. The sum of the provision for doubtful accounts, uninsured discounts
and charity care, as a percentage of the sum of revenues, the provision for doubtful accounts, uninsured discounts
and charity care, was 25.6% for 2010 compared to 23.8% for 2009. At December 31, 2010, our allowance for
doubtful accounts represented approximately 93% of the $4.249 billion total patient due accounts receivable
balance, including accounts, net of estimated contractual discounts, related to patients for which eligibility for
Medicaid coverage or uninsured discounts was being evaluated.
Revenues increased 4.7% to $28.035 billion for 2010 from $26.776 billion for 2009. The increase in
revenues was due primarily to the combined impact of a 3.5% increase in revenue per equivalent admission and a
1.2% increase in equivalent admissions compared to 2009. Same facility revenues increased 4.6% due primarily
to the combined impact of a 3.2% increase in same facility revenue per equivalent admission and a 1.4% increase
in same facility equivalent admissions compared to 2009.
Salaries and benefits, as a percentage of revenues, were 44.5% in 2010 and 44.7% in 2009. Salaries and
benefits per equivalent admission increased 3.2% in 2010 compared to 2009. Same facility labor rate increases
averaged 2.7% for 2010 compared to 2009.
Supplies, as a percentage of revenues, were 17.7% in 2010 and 18.2% in 2009. Supply costs per equivalent
admission increased 0.7% in 2010 compared to 2009. Supply costs per equivalent admission increased 2.4% for
medical devices, 0.8% for blood products, and 2.9% for general medical and surgical items, and declined 0.7%
for pharmacy supplies in 2010 compared to 2009.
Other operating expenses, as a percentage of revenues, increased to 17.9% in 2010 from 17.6% in 2009.
Other operating expenses are primarily comprised of contract services, professional fees, repairs and
maintenance, rents and leases, utilities, insurance (including professional liability insurance) and nonincome
taxes. The major component of the increase in other operating expenses, as a percentage of revenues, was related
to indigent care costs in certain Texas markets which increased to $354 million for 2010 from $248 million for
2009. Provisions for losses related to professional liability risks were $222 million and $211 million for 2010 and
2009, respectively.
Equity in earnings of affiliates increased from $246 million for 2009 to $282 million for 2010. Equity in
earnings of affiliates related primarily to our Denver, Colorado market joint venture.
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