Genesis posts increased quarterly profits, Medicare pay worries ahead

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Genesis HealthCare Corp. continued its return to better fiscal health during the fiscal quarter ending June 30. The Kennett Square, PA-based nursing home chain this week reported net income of 38 cents per share ($7.6 million), up from 33 cents per share ($6.7 million) in the year earlier quarter.

The company attributed the gains to higher reimbursement rates and more higher-acuity residents. The average Medicare daily payment was $367.25 during the most recent quarter, up from $351.63 a year ago.

While revenues were up nearly 10%, to $409 million, tighter times were predicted for the future, when recently announced new Medicare payment rates are expected to hit.

"While we are still evaluating the final rule, we believe the change will have a negative impact to Medicare rates starting January 1, 2006," said George V. Hager, Jr., chairman and CEO.

"Effective October 1, 2005, we estimate that our Medicare rates will increase by $10 per patient day. Starting January 1, 2006, we estimate that our Medicare rates could be reduced by as much $20 per day as a result of RUGs refinement. Thus, our Medicare rates could decline by $10 per patient day off of our current Medicare per diems effective January 1, 2006."

Genesis is the nation's fourth-largest skilled-nursing provider in the country, with more than 23,000 skilled nursing beds at 145 facilities it owns or operates, in addition to 13 assisted living facilities.