Community Health Systems

Community Health Systems (CHS) is a Fortune 500 company based in Franklin, Tennessee.[1] It was the largest provider of general hospital healthcare services in the United States in terms of number of acute care facilities.[2][3] CHS affiliates own, operate, or lease 95 hospitals in 16 states.[4] At the close of 2016, it had operated 158 hospitals in 22 states.[5]

Community Health Systems, Inc.
Public
Traded asNYSE: CYH
S&P 600 Component
IndustryHealth care
PredecessorTriad Hospitals 
Founded1985
FoundersRichard Ragsdale
David Steffy
Headquarters
Franklin, Tennessee
,
United States
Key people
Wayne T. Smith (CEO)
Thomas J. Aaron (CFO)
Revenue$18.438 billion (2016)
$(860 million) (2016)
$(1.71 billion) (2016)
Total assets$(21.9 billion) (2016)
Total equity$(1.615 billion) (2016)
Number of employees
 120,000
Websitehttp://www.chs.net/

In August 2015, the company announced plans to spin off 38 hospitals and its management and consulting subsidiary, Quorum Health Resources, into a new publicly traded company called Quorum Health Corporation.[6] The company completed the spinoff of Quorum Health Corporation on April 29, 2016. Quorum owns or leases hospitals across 16 states, primarily in cities or counties with populations of 50,000 or less. It is listed on the New York Stock Exchange under the ticker symbol: QHC.[7]

On October 3, 2016, CHS was removed from the S&P Midcap 400 and added to the S&P Smallcap 600. Under CEO Wayne T. Smith, the Company's stock has lost over 76% of its value since the year 2000.

Chinese billionaire Tianqiao Chen had a 22.2 percent stake in Community Health Systems in 2017.[8]

History

Founding and early years (1985-2010)

E. Thomas Chaney, former executive of Hospital Affiliates, Inc. and David Steffy and Richard Ragsdale, former executives at Hospital Corporation of America spinoff Republic Health Corporation, formed Community Health Systems in 1985.[9]

The company made its initial public offering in 1991. In 1996, the company was purchased by private equity firm Forstmann Little & Company.[10] Community Health Systems went public again in 2000.[11] In August 2003, the company acquired Southside Regional Medical Center.[12] On October 10, 2015, the 372-bed Grandview Medical Center began operating in Birmingham, Alabama, replacing Trinity Medical Center.[13]

In 2000, Community Health Systems paid $31 million to the United States Department of Justice to settle a review of its billing practices.[14]

In 2007, Community Health Systems purchased Plano, Texas-based Triad Hospitals for $6.8 billion, adding nearly 50 hospitals, hospital management and consulting business Quorum Health Resources, and nearly doubling the size of the company. Among the facilities included in the deal was McKenzie-Willamette Hospital in Springfield, Oregon; Trinity Medical Center in Birmingham, Alabama; and the seven hospitals of Lutheran Health Network in the Ft. Wayne, Indiana region.[15][16][17]

In 2010, McKenzie-Willamette's healthcare workers' union, SEIU, Local 49, claimed that workload increases, slashed benefits, and staff reductions had lowered the quality of both patient care and quality of life for employees.[18] The union, in its "Profits Before Community" campaign against the hospital, continues to highlight that profits have tripled while charitable care and employee benefits have steadily decreased since the hospital moved from a non-profit to a for-profit enterprise under CHS.[19]

Recent developments (2011-present)

In 2011, it was accused by Tenet Healthcare of overbilling Medicare in its aggressive admissions policy compared to its peers. It was subpoenaed by Medicare on its aggressive billing to the Medicare systems.[20]

In 2013, Community Health Systems entered into an agreement with Health Management Associates to purchase HMA for about $3.6 billion in cash and stock.[21] The merger was completed in January 2014 and made Community Health Systems the largest for-profit hospital operator at the time,[22] with 206 hospitals in 29 states.[23] The acquisition of HMA brought with it liability for lawsuits and criminal charges of fraudulent claims against Medicare and other federal programs. CHS settled these claims for $262 million in October, 2018.[24]

On August 4, 2014, Community Health Systems paid $95.14 million to the United States Department of Justice to resolve multiple lawsuits "alleging that the company knowingly billed government health care programs for inpatient services that should have been billed as outpatient or observation services."[25] As part of the agreement, Community Health Systems was required to enter into a corporate integrity agreement that required the Company to participate in compliance efforts.

It was reported on August 18, 2014 that hackers broke into Community Health System's records system and stole data on 4.5 million patients. These data included names, Social Security numbers, physical addresses, birthdays and telephone numbers. CHS provided all patients whose records were impacted with free identity theft protection.[26]

On February 2, 2015, Community Health Systems was required to pay $75 million to settle allegations "that they made illegal donations to county governments to reap more federal dollars under a now-discontinued matching program."[27] The allegations were brought about by a former CHS employee in a complaint under the False Claims Act.[28]

In October 2015, Community Health Systems paid $13 million to the United States Department of Justice to resolve allegations related to the False Claims Act.[29]

After CHS agreed in 2015 to sell Memorial Hospital of Salem County in New Jersey to Prime Healthcare Foundation,[30] a nonprofit affiliated with Prime Healthcare Services;[31] the sale was approved by New Jersey in early February 2017.[32][33]

On December 6, 2016 a former CFO of a CHS hospital was awarded $1.9 million in a whistleblower lawsuit he filed after he was terminated for refusing to submit false financial documents.[34]

In January 2017, a settlement between investors and CHS executives for $60 million was reached. The settlement resolved allegations of "breach of fiduciary duty" by CHS executives.[35]

In March 2017, Quorum's board retained outside counsel in relation to whether Community Health Systems had committed fraud with regards to financial projections for Quorum, and whether any of its current management may have been involved in any possible fraud. In June 2017 Quorum said although the investigation did not produce "conclusive evidence" of fraud the projections appeared to be incompetent at best.[36]

In April–July 2017, Community Health Systems rejected overtures from key Lutheran Health Network doctors to facilitate sale of its profitable network in CHS to a third party, after assertions of continual lack of re-investment into the network's facilities and staff by CHS management. After those discussions/accusations became public, several key leaders of the affiliated hospitals, Lutheran and Dupont, and the network were fired or resigned. Key prominent local community leaders Chuck Surack and Tom Kelley resigned from the Lutheran Health Network's and hospitals' advisory boards.[37][38][39]

On March 13, 2018 it was reported that the Company had hired financial advisory firm Lazard to help address long-term debt.[40]

In December 2019, Community Health announced that subsidiaries of the company have completed the sale of three Virginia hospitals - Southside Regional Medical Center in Petersburg, Southampton Memorial Hospital in Franklin, and Southern Virginia Regional Medical Center in Emporia, effective on January 1, 2020.[41]

On April 27, 2020, Community Health Systems, Inc. (NYSE: CYH) announced that an affiliate of the Company has signed a definitive agreement to sell its majority ownership interest in 84‑bed St. Cloud Regional Medical Center and its associated healthcare operations in St. Cloud, Florida, to a subsidiary of Orlando Health. Orlando Health currently holds minority ownership interest in St. Cloud and will purchase the remaining interest through this transaction.[42]

Regional markets

In its annual Form 10-K filed in 2019, it identified Florida, Texas and Indiana as areas of geographic concentration.[43]

The company has owned many hospitals in the South, which did not expand Medicaid and consequently their hospitals may have to provide more uncompensated care.[44]

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References
  1. "Community Health Systems". Fortune.com. Retrieved 2018-11-21.
  2. "Community Health Systems to spin out new company - Nashville Business Journal". Nashville Business Journal. Retrieved 2015-11-09.
  3. "CHS closes Triad purchase". Nashville Business Journal. 2007-07-25.
  4. Community Health Systems, Inc http://www.chs.net/. Retrieved 2019-12-31. Missing or empty |title= (help)
  6. Weaver, Christopher; Jaramillo, Cassandra. "Community Health Spinoff to Focus on Smaller Markets". The Wall Street Journal. ISSN 0099-9660. Retrieved 2015-11-09.
  7. MICHAEL ROKNICK. "Community Health spins off new company". Sharonherald.com. Retrieved 22 May 2019.
  8. Becker's Revenue Cycle Management Report (12/11/2017)
  9. "BUSINESS PEOPLE; 3 Hospital Bidders Facing Skepticism". New York Times. 1987-04-13.
  10. Freundheim, Milt (2006-06-11). "Forstmann to Acquire Community Health for $1.1 Billion". New York Times.
  11. "Stock Offerings Are Set". New York Times. 2000-06-05.
  12. "Community Health Systems Acquires Southside Regional Medical Center in Petersburg, Virginia". August 4, 2003. Retrieved Jul 26, 2013.
  13. "Ten things you need to know about Trinity's move to 280". AL.com. Retrieved 2015-12-14.
  14. "Community Health Systems ends federal billing review with $31 million settlement". Nashville Post. Retrieved 2016-08-17.
  15. "McKenzie-Willamette Hospital finds for-profit backer". Bizjournals.com. Retrieved 22 May 2019.
  16. Francis, Theo. "Community Health to Acquire Rival Triad". The Wall Street Journal. ISSN 0099-9660. Retrieved 2015-12-14.
  17. "Community Health Systems, Inc". Sec.gov. Retrieved 2015-12-14.
  18. "Hospital, union talks heat up - Financial - Eugene, Oregon". Special.registerguard.com. Retrieved 22 May 2019.
  19. "Archived copy". Archived from the original on 2014-01-05. Retrieved 2014-01-04.CS1 maint: archived copy as title (link)
  20. "Community Health Faces Inquiry on Medicare Claims". New York Times. 2011-11-15.
  21. De La Merced, Michael J. (30 July 2013). "Community Health Agrees to Buy H.M.A. for $3.6 Billion". The New York Times.
  22. Dubois, Shelley (26 January 2014). "Community Health Systems completes purchase of HMA". The Tennessean. Retrieved 15 December 2017.
  23. "CHS Completes HMA Acquisition". Beckershospitalreview.com. Retrieved 2015-11-09.
  24. McDonald, R. Robin (September 26, 2018). "Georgia Whistleblowers Share in $262M Settlement With Florida Hospital Chain". Daily Report. Retrieved 16 January 2019.
  25. "Community Health Systems Inc. to Pay $98.15 Million to Resolve False Claims Act Allegations". Justice.gov. Retrieved 2016-08-17.
  26. Pagliery, Jose. "Hospital network hacked, 4.5 million records stolen". CNNMoney. Retrieved 2015-11-09.
  27. "Community Health Systems to pay $75 million for alleged New Mexico Medicaid scheme". Retrieved 2016-08-17.
  28. "Whistleblower played key role in case that Community Health Systems hospitals settle for $75 million". Prnewswire.com. Retrieved 2016-08-17.
  29. "DOJ settles with 450 hospitals for $250M over False Claims Act allegations". Fiercehealthcare.com. Retrieved 2016-08-17.
  30. "Tennessee firm sells South Jersey hospital": Philadelphia Business Journal on December 1, 2015, author John George
  31. Jan 29, Posted on; 2018. "Health System". Prime Healthcare Services. Retrieved 2019-06-09.CS1 maint: numeric names: authors list (link)
  32. Brubaker, Harold. "Sale of Memorial Hospital of Salem County approved": The Philadelphia Inquirer, February 2, 2017. Accessed April 16, 2017.
  33. "What's next after N.J. hospital sale gets key approval from state": NJ.com on February 2, 2017, author Bill Gallo Jr.
  34. "Whistleblower lands $1.9 million in suit against CHS - Nashville Business Journal". Nashville Business Journal. Retrieved 2016-12-06.
  35. Ellison, Ayla. "CHS executives ink $60M settlement in investor suit". Beckershospitalreview.com. Retrieved 2017-07-24.
  36. Ellison, Ayla. "Quorum closes investigation into spinoff from CHS: 6 things to know". Beckershospitalreview.com. Retrieved 2017-06-30.
  37. Rege, Alyssa. "Lutheran Health executive resigns, claims CHS forced physician group to disband". Beckershospitalreview.com. Retrieved 2017-07-14.
  38. "Chuck Surack, Tom Kelley quit Lutheran Health boards to protest ownership - News-Sentinel.com". News-Sentinel.com. Retrieved 2017-07-14.
  39. "GUEST COLUMN: What really happened with Community Health Systems - News-Sentinel.com". News-Sentinel.com. Retrieved 2017-07-14.
  40. "Community Health Systems' stock price falls 11% in two days after rumors of hiring debt adviser". Modern Healthcare. Retrieved 2018-03-15.
  41. "Bloomberg - Are you a robot?". www.bloomberg.com. Retrieved 2020-03-26.
  42. "Community Health Systems Announces Definitive Agreement to Sell St. Cloud, Florida Hospital". www.businesswire.com. 2020-04-27. Retrieved 2020-04-29.
  43. "Form 10-K". www.sec.gov. 2018-12-31. Retrieved 2019-06-09.
  44. "The collapse of Community Health Systems". Axios. Retrieved 2019-06-09.
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