Health Management slides as economy hurts admissions

Goldman Sachs analyst Matthew Borsch, who rates HMA at "Neutral," said HMA Chief Financial Officer Bob Farnham attributed soft second-quarter volumes to the slowing economy during a presentation at the bank's health care conference Tuesday.

Farnham noted that patients facing higher copays and deductibles are likely deferring non-urgent care, but said HMA's more aggressive stance on charity care is stabilizing bad debt levels.

However, Cowen and Co.'s Kemp Dolliver thinks HMA has more than the slowing economy to deal with, cautioning that reports of recurring quality issues at its Franklin Regional Medical Center in North Carolina highlights the company's sluggish progress in turning around operations in a difficult environment.

While noting that the hospital represents only 1 percent of HMA's revenue, Dolliver said HMA risks volume declines in response to the negative publicity around the Centers for Medicare and Medicaid's threat to cut off payments to Franklin for the second time in four months because of quality issues.

The hospital has until June 22 to file a plan of corrective action, which Dolliver also points out will cost HMA to address.

Shares fell 37 cents, or 5.2 percent, to $6.82 in afternoon trading on lighter than average volume.