NME Posts Flat Net for Quarter

Earnings were flat in both the second quarter and first six months for Los Angeles-based National Medical Enterprises, the company reported Monday.

NME’s acute-care facilities, which account for about half of the company’s revenue, plunged 7%, resulting in a net of $37.9 million on revenue of $864.4 million for the three months ended Nov. 30, compared to earnings of $38 million on revenue of $729.5 million for the same period a year earlier. For the six months, net was $72.7 million on revenue of $1.68 billion, compared to $72.4 million on revenue of $1.43 billion a year earlier.

NME, the nation’s second-largest health-care company, posted record earnings throughout the 1970s and well into the 1980s. Along with major competitors, it expanded aggressively during a time when many nonprofit and public institutions found themselves caught in a cost-price squeeze exerted by government agencies seeking to bring skyrocketing health costs under control.

Across the board, businesses, which tardily awakened to exploding health benefits budgets during the last recession, began pressuring insurance companies to hold down costs. Some of the results of these efforts were to shorten hospital stays, encourage outpatient treatment and stimulate employee awareness of good health practices. The result has been an increasing vacancy rate in hospitals. Nationally, hospital attendance that hovered at about the 76% mark as recently as 1981 has now dipped below 65%, according to the American Hospital Assn.

NME and other industry leaders, such as Beverly Hills-based American Medical International, have been seeking to diversify within the health-care field as hedges against declining hospitalization.

At NME’s annual meeting in October, Chairman Richard K. Eamer cited increased acquisition and development activity as reasons for the company’s sluggish earnings.

National Medical owns, operates or manages 535 hospitals with more than 63,000 beds.