United Health, HCA post stronger numbers

The nation’s largest insurer and the largest hospital chain are proving that the major players on both sides of the insurer-provider divide can find ways to thrive in an era when overall healthcare spending remains in check.

Profits at insurer United Health Group exceeded Wall Street’s estimates in the third quarter largely because of lower-than-expected medical costs. “Medical utilization remained restrained,” the Minnetonka, Minn.-based company noted in its earnings release.

The company posted more than $1.6 billion in profit on almost $32.8 billion of revenue in the quarter, compared with $1.57 billion in profit on $30.6 billion of revenue in the third quarter of 2013.

Nashville-based HCA Holdings, meanwhile, forecast it will report rising sales and profits at its 165-hospital chain because same-facility admissions rose 2.8% in the quarter compared with the same quarter in 2013. The company’s before-tax income rose to $929 million on $9.2 billion in revenue in the third quarter from $701 million in pre-tax earnings on $8.5 billion in revenue a year ago.

But there was at least one factor hiking HCA earnings that won’t be replicable, which suggests the overall picture may not be as rosy as its stellar numbers would indicate. HCA revealed it will record roughly $94 million in Medicare revenue as an estimated settlement amount for claims previously denied by recovery audit contractors working for the CMS.

The CMS has been offering providers with backlogged claim appeals a settlement offer worth roughly 68% of their claim amounts, which apparently HCA plans to accept.