Provider Giants Feel the Pain of Respiratory Cuts

ATLANTA–American HomePatient, Apria Healthcare, Lincare
Holdings and Rotech Healthcare continue to feel the impact of CMS’
reimbursement cuts. All four providers said Medicare reimbursement
reductions negatively affected their revenues for the first quarter
of the year ended March 31.

Brentwood, Tenn.-based American HomePatient, which has 263
centers, posted a net loss of $0.7 million for the period, compared
to $1.2 million in net income for the same quarter in 2005. The
company also said its revenues dropped to $80.5 million, $1 million
less than the same period last year.

According to AHP, Medicare reimbursement reductions totaling
approximately $4.2 million were primarily to blame. Otherwise,
revenues would have increased approximately $3.2 million, or 4
percent, for the quarter, the company said. The company is
currently considering an acquisition by one of its major
shareholders, Highland Capital Management, which announced in
February it wants to buy the provider, citing increasing
disappointment with AHP’s performance.

Apria, based in Lake Forest, Calif., with approximately 500
branches, reported net income at $16.1 million, a $9.1 million drop
from the same period last year. Revenues were $368.1 million
compared to $371.9 million for the first quarter of 2005. The
impact of Medicare reductions versus the first quarter of 2005 was
$8.4 million to revenues and $6.3 million to net income, the
company said.

Clearwater, Fla.-based Lincare, with 883 locations, reported net
income of $47.9 million, $6.7 million less than the first quarter
last year. Revenues were $333.6 million, a 9 percent increase over
revenues of $305.2 million for the same period in 2005.

With 484 branches, Rotech, Orlando, Fla., reported a net loss of
$2.9 million, slightly better than last year’s net loss of $3
million for the period. Net revenues rose to $132.5 million versus
$123.3 million for the period last year. Medicare reimbursement
reductions reduced revenues by approximately $11.25 million for the
quarter, the company said.