U.S. authorities are probing whether heart procedures performed at HCA Holdings Inc hospitals were medically necessary and are investigating the company's
billing practices, the company said on Monday.
The company's shares were down as much as 10 percent.
HCA, in an unusual move, also issued a detailed rebuttal defending itself against a not-yet-published report by The New York Times. The company said it
believes the newspaper will question physician decisions at its hospitals regarding certain heart procedures.
The U.S. Department of Justice is reviewing whether charges to the federal government related to use of implantable cardio-defibrillators (ICDs) met with
billing criteria set by the Medicare health program for the elderly, HCA said in a filing with the U.S. Securities and Exchange Commission.
The review will include ICD billing and medical records at 95 of the company's 163 hospitals from October 2003 to the present.
ICDs are devices implanted in a patient's chest to help regulate heart rhythm and protect against potentially dangerous racing heart beats. Major
manufacturers of the devices include: Medtronic Inc, Boston Scientific Corp and St Jude Medical Inc.
A representatives for St Jude was not immediately available. A Boston Scientific spokesman did not have an immediate comment. A Medtronic spokesman declined
to comment on an investigation involving another company.
HCA also said that in July the federal prosecutor's office in Miami requested information on reviews assessing the medical necessity of certain
interventional heart procedures. HCA said it believes such reviews have taken place at about 10 of its hospitals, primarily in Florida.
The reviews were conducted by third-party organizations retained by the company, an HCA spokesman said.
The company said its own review of how many of its hospitals may be affected was not yet complete.
Interventional heart procedures include angioplasty and stenting used to clear and prop open blocked coronary arteries.
Jefferies analyst Arthur Henderson said such inquiries were not uncommon.
"Every time they come out, people get pretty nervous about it and the stocks trade down," Henderson said. "There is not enough information to say this is
going to end up bad. As long as the company continues to execute the way they have this quarter, I think there is some upside to the stock."
Shares in HCA fell as much as 10 percent after the disclosures on Monday, but regained some ground to close 3.95 percent lower at $25.55. Rival hospital
operators also fell on news of the probes before recovering. Community Health shares closed down 0.6 percent at $23.83, while shares of Tenet Healthcare Corp
were off 0.03 percent at $4.66.
EARNINGS BEAT EXPECTATIONS
HCA on Monday also reported better-than-expected quarterly earnings as more patients were treated at its facilities. The company stood by its 2012 earnings
forecast.
Net income for the second quarter rose to $391 million, or 85 cents per share, from $229 million, or 43 cents per share, a year earlier.
Excluding one-time gains, earnings were 85 cents per share, topping analysts' average forecast of 78 cents, according to Thomson Reuters I/B/E/S.
Revenue rose 12 percent to $8.11 billion. Admissions to facilities owned for at least one year, combined with outpatient volumes, increased 3.9 percent.
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