Beleaguered by mounting debt and down-trending stock values, hospital healthcare leader Community Health Systems (CHS) has made some questionable moves that have healthcare professionals and shareholders on opposite sides of the proverbial fence—the problem is that patients are most likely to suffer before it’s all over.
Once the largest for-profit hospital chain in the United States, CHS is now facing $15 billion in debt after years of aggressively buying up similar, smaller healthcare providers—notably, the acquisition of Health Management Associates (HMA) in 2014 was an action that quickly increased CHS’s size to 206 hospitals in 29 states but also burdened the company with $3.7 billion in debt.
Several years later, the purchase of HMA has not been the boon it was hoped to be—the added facilities have yet to pull their weight and the massive size of the company has many investors shying away from anything but buying bits and pieces of its holdings.
CHS is now attempting to appease its debtholders with profits from some of its more lucrative locations—but doctors at the facilities say it’s at the expense of reinvestment in the operations themselves, causing issues with the quality of care and lagging patient satisfaction. Case in point is one of their flagship, and most profitable, hospitals in Fort Wayne, Indiana. Rated two out of five stars by a Medicare.gov survey, Lutheran Hospital was ranked 104th out of 122 hospitals in Indiana—and even then, 12 hospitals weren’t included in the rankings because sufficient data wasn’t provided.
Faced with rapidly declining standards that put profits before patient health, a number of doctors at the hospital formed Fort Wayne Physicians LLC and attempted to bring in a partner that would have purchased a controlling interest in the facility and worked directly with doctors to reverse the current trends and improve quality and care. The CHS Board of Directors rebuffed the offer from the doctors in addition to stating that they were surprised by the move and the report of overall dissatisfaction. A letter from the company’s CEO and COO responded that, “Frankly, we were surprised by some of these concerns. We believed things were going well, based on reports we received from your market and division leadership.”
Meanwhile, other actions by the company don’t paint the pleasant picture they describe, as CHS recently announced that they plan to sell off 30 hospitals in Texas, Mississippi, Louisiana, Florida, Ohio and Pennsylvania. Hopefully these healthcare facilities will ultimately benefit from being cut loose from this foundering ship, but in the short term it’s the communities that have to bear the brunt of CHS’s bad decisions.
Both an Emory School of Law graduate and MBA graduate of Goizueta Business School at Emory, Chris Nace focuses his practice on areas of medical malpractice, drug and product liability, motor vehicle accidents, wrongful death, employment discrimination and other negligence and personal injury matters.