The crippling trends that have swept through the hospital industry might finally be afflicting

Health Management Associates

(HMA)

.

The rural-hospital operator -- long resistant to bad debt woes caused by the uninsured -- has just laid off dozens of employees at an Oklahoma hospital due to "ailing finances," according to an article Tuesday in the state's largest newspaper. The

Daily Oklahoman

reported that Midwest Regional Medical Center is shedding 71 of its 1,000-plus employees as part of a "strategic plan to meet organizational financial obligations."

John Merriwether, a spokesman for the hospital's parent who spoke with

TheStreet.com

on Tuesday, downplayed the cutbacks as a "fairly routine phenomenon" that occurs as HMA facilities adjust to the normal industry slowdown that arises this time of the year. He said that Midwest Regional may have simply faced more necessary trimming than most.

But Brian Clemens, who serves as CEO of the affected hospital, sounded a bit more ominous when talking to the

Oklahoman

.

"We experienced an atypical seasonal downturn this quarter that required us to respond promptly to maintain our financial health," Clemens stated in the article.

More specifically, Clemens told the

Oklahoman

that Midwest Regional is cutting back due to a recent drop in occupancy and "lower-than-expected reimbursements." The latter phrase, in particular, caught one industry expert's attention.

"Sounds like management speak for bad debt," declared Peter Young, a business consultant at HealthCare Strategic Issues, who is headquartered in HMA's home base of Florida.

Midwest Regional did not return a phone call from

TheStreet.com

seeking comment. But Merriwether said on Tuesday that the hospital's drop in reimbursement could in fact be caused by the uninsured.

In recent quarters, HMA has reported a strange immunity to bad debt problems. That has led a few tough health care analysts -- at odds with Wall Street cheerleaders -- to feel more worried than reassured. Fulcrum analyst Sheryl Skolnick has sounded perhaps the loudest alarm. After fretting for months over key fundamentals, such as cash flow and profit margins, she more specifically warned in May that HMA could finally report a tough quarter this summer.

Fulcrum believes that HMA's practice of waiting 150 days to reserve for unpaid governmental accounts -- and its presence in major markets serving the uninsured -- could soon hurt its results.

HMA "may not yet realize the full depth of the problem with the uninsured and how bad its receivables really are," wrote Skolnick, who has long recommended selling HMA's shares. The current quarter "may be the first to surprise HMA."

David Peknay, a credit analyst for Standard & Poor's, chimed in with his own concerns about the company last month. He seemed worried that HMA is treating so many uninsured patients -- whether their accounts wind up in the bad debt column or not. HMA tends to classify many uninsured patients as charity care cases, never recognizing the revenue from their business and, therefore, never finding itself stuck with writing off their accounts down the road.

Merriwether indicated that HMA's practice of booking uninsured accounts as charity upfront should mean that no bad debt surprises are coming. But Peknay wonders why HMA's charity care accounts have been growing so much faster than its bad debt expense when the uninsured population -- including patients who do not qualify for charity care -- is expanding as a whole.

"The incurrence of great amounts of charity care ... in the absence of an increase in expected bad debt raises a question about the aggressiveness regarding charity care classification and the potential overstatement of profit margins," Peknay wrote.

To be fair, Midwest Regional is just one hospital in a network of 53, and it could be suffering from isolated problems. Clemens failed to elaborate about his hospital's drop in reimbursements in the story by the

Oklahoman

.

However, leaders at both the hospital and the corporate level did meet two months ago with

TheStreet.com

at the very facility now undergoing layoffs. The company was particularly proud of an expanded emergency room that ranks as the busiest in the state. HMA relies, more heavily than some, on E.R. visitors for patient admissions.

"There really is some truth to the E.R. being the biggest door to the hospital," Merriwether told

Modern Healthcare

in 2001. "Our goal is to make that first impression a really good one."

Early this year, HMA posted a surprising 14.5% jump in E.R. visits companywide. But Skolnick quickly warned that a surge in E.R. patients -- who are increasingly uninsured -- was "

not

something to cheer about."

Despite its popular E.R., Midwest Regional has seen its patient census fall nearly 12% below average this month, according to figures reported by the

Oklahoman

. Clemens pointed to the relocation of an open-heart surgeon -- a hospital-specific issue -- as just one factor in the decline. The hospital, which has been expanding in recent years, is now in the process of closing both a Medicaid obstetrics clinic and a home care service in an effort to cut costs, the newspaper stated.

Young, for one, spotted trouble.

"The operational climate for hospitals is not favorable due to cost increases and an eroding revenue base," he said. "It appears the earlier cautions and downgrades of three analysts and a credit rating agency are now a reality, as evidenced by the financial ails of HMA's Oklahoma hospital."

Far away on Wall Street, investors failed to register the news. Shares of HMA are trading at $21.64 late Tuesday.