|
Beverly in Medicare probe
|
 |
July 23, 1998: 1:26 p.m. ET
Nursing home operator's shares plunge 41% on exam of cost allocations
|
NEW YORK (CNNfn) - Shares of nursing home operator Beverly Enterprises Inc. plummeted 41 percent Thursday after the company said it is the subject of a federal probe relating to the allocation to Medicare of certain nursing labor costs in its skilled nursing centers over seven years through 1997.
In a statement from its Fort Smith, Ark., headquarters, Beverly, the leading provider of post-acute healthcare in the United States, said that to the best of its knowledge the investigation doesn't involve eligibility for Medicare coverage, delivery of care or quality of care provided.
However, the government hasn't disclosed the scope or origin of the probe, Beverly said.
The disclosure came as the company posted second-quarter earnings of 20 cents a share, unchanged from a year ago. The results were a penny above Wall Street's consensus estimate. Net income rose to $21.6 million from $20 million a year earlier.
The company said it had received subpoenas and voluntarily provided "substantial" information to investigators. The probe is being jointly conducted by the Justice Department and the Office of the Inspector General of the Department of Health and Human Services.
Beverly (BEV) stock nose dived 40.6 percent on the New York Stock Exchange, falling 5-7/8 to 8-3/4 on volume of 2.25 million shares.
Beverly said it had been informed that its independent auditor, Ernst and Young, had been subpoenaed in the past week over the auditor's review of Beverly's internal controls.
In its statement, Beverly denied it knowingly had violated any rules governing allocation of costs. Under those rules, skilled nursing centers are required to allocate labor costs to Medicare units on an "equitable" basis.
"The company believes that its cost-reporting policies and procedures are consistent with government regulations and reflect industry norms for the determination of these cost allocations," Beverly said.
Beverly operates about 570 skilled-nursing facilities across the country, along with a network of assisted-living centers, outpatient therapy clinics, transitional hospitals and home health care centers.
With managed care profits under pressure, the company has focused recently on revenue generators such as higher-paying Medicare and private patients. 
|
|
|
|
|
|
Beverly Enterprises
|
Note: Pages will open in a new browser window
External sites are not endorsed by CNNmoney
|
|
|
|
 |
|
