Community Health Systems

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Community Health Systems
Public
Traded as NYSECYH
S&P 600 Component
Industry Health care
Founded 1985
Founders Richard Ragsdale
David Steffy
Headquarters Franklin, Tennessee, United States
Key people
Wayne T. Smith (CEO)
Thomas J. Aaron (CFO)
Revenue Decrease$18.438 billion (2016)
Decrease$(860 million) (2016)
Decrease$(1.71 billion) (2016)
Total assets Decrease$(21.9 billion) (2016)
Total equity Decrease$(1.615 billion) (2016)
Number of employees
Decrease 120,000
Website http://www.chs.net/

Community Health Systems Inc. is a Fortune 500 company based in Franklin, Tennessee. It is the largest provider of general hospital healthcare services in the United States in terms of number of acute care facilities.[1][2] As of December 31, 2016, it owns, leases or operates 158 hospitals in 22 states.[3]

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.[4] 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.[5]

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.

History[edit]

Founding and early years (1985-2010)[edit]

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.[6]

The company made its initial public offering in 1991. In 1996, the company was purchased by private equity firm Forstmann Little & Company.[7] Community Health Systems went public again in 2000.[8] In August 2003, the company acquires Southside Regional Medical Center.[9] On October 10, 2015, the 372-bed Grandview Medical Center began operating in Birmingham, Alabama, replacing Trinity Medical Center.[10]

In 2000, Community Health Systems paid $31 million to the United States Department of Justice to settle a review of its billing practices.[11]

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.[12][13][14]

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.[15] 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.[16]

Recent developments (2011-present)[edit]

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.[17]

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.[18] The merger was completed in January 2014 and made Community Health Systems the largest for-profit hospital operator at the time,[19] with 206 hospitals in 29 states.[20]

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."[21] 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.[22]

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."[23] The allegations were brought about by a former CHS employee in a complaint under the False Claims Act.[24]

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.[25]

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.[26]

After CHS agreed in 2015 to sell Memorial Hospital of Salem County in New Jersey to Prime Healthcare Foundation,[27] the sale was approved by New Jersey in early February 2017.[28][29]

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.[30]

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 was 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.[31]

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.[32][33][34]

On March 13th, 2018 it was reported that the Company had hired financial advisory firm Lazard to help address long-term debt issues.[35]


See also[edit]

Per:[36] Chinese billionaire Tianqiao Chen has a 22.2 percent stake in Franklin, Tenn.-based Community Health Systems after buying 100,164 more shares of the company, according to a Securities and Exchange Commission filing. Mr. Chen and his group of companies paid an average of $3.97 per share, bringing the total price of the transaction to just under $400,000. A pioneer in China's online gaming industry, Mr. Chen began upping his stake in the for-profit hospital operator in 2016. He most recently purchased nearly 9.8 million shares of CHS in August.

References[edit]

  1. ^ "Community Health Systems to spin out new company - Nashville Business Journal". Nashville Business Journal. Retrieved 2015-11-09. 
  2. ^ "CHS closes Triad purchase". Nashville Business Journal. 2007-07-25. 
  3. ^ [1]
  4. ^ Weaver, Christopher; Jaramillo, Cassandra. "Community Health Spinoff to Focus on Smaller Markets". Wall Street Journal. ISSN 0099-9660. Retrieved 2015-11-09. 
  5. ^ [2]
  6. ^ "BUSINESS PEOPLE; 3 Hospital Bidders Facing Skepticism". New York Times. 1987-04-13. 
  7. ^ Freundheim, Milt (2006-06-11). "Forstmann to Acquire Community Health for $1.1 Billion". New York Times. 
  8. ^ "Stock Offerings Are Set". New York Times. 2000-06-05. 
  9. ^ "Community Health Systems Acquires Southside Regional Medical Center in Petersburg, Virginia". August 4, 2003. Retrieved Jul 26, 2013. 
  10. ^ "Ten things you need to know about Trinity's move to 280". AL.com. Retrieved 2015-12-14. 
  11. ^ "Community Health Systems ends federal billing review with $31 million settlement | Nashville Post". Nashville Post. Retrieved 2016-08-17. 
  12. ^ http://www.bizjournals.com/portland/stories/2003/01/27/daily43.html?jst=s_cn_hl
  13. ^ Francis, Theo. "Community Health to Acquire Rival Triad". Wall Street Journal. ISSN 0099-9660. Retrieved 2015-12-14. 
  14. ^ "Community Health Systems, Inc". www.sec.gov. Retrieved 2015-12-14. 
  15. ^ http://special.registerguard.com/csp/cms/sites/web/news/sevendays/24964207-35/hospital-mckenzie-willamette-health-hagins.csp
  16. ^ http://www.seiu49.org/2013/12/11/mckenzie-willamette-profits-before-community/
  17. ^ "Community Health Faces Inquiry on Medicare Claims". New York Times. 2011-11-15. 
  18. ^ De La Merced, Michael J. (30 July 2013). "Community Health Agrees to Buy H.M.A. for $3.6 Billion". New York, NY: New York Times. 
  19. ^ Dubois, Shelley (26 January 2014). "Community Health Systems completes purchase of HMA". The Tennessean. Retrieved 15 December 2017. 
  20. ^ "CHS Completes HMA Acquisition". www.beckershospitalreview.com. Retrieved 2015-11-09. 
  21. ^ "Community Health Systems Inc. to Pay $98.15 Million to Resolve False Claims Act Allegations". www.justice.gov. Retrieved 2016-08-17. 
  22. ^ Pagliery, Jose. "Hospital network hacked, 4.5 million records stolen". CNNMoney. Retrieved 2015-11-09. 
  23. ^ "Community Health Systems to pay $75 million for alleged New Mexico Medicaid scheme". Retrieved 2016-08-17. 
  24. ^ LLP, Phillips & Cohen. "Whistleblower played key role in case that Community Health Systems hospitals settle for $75 million". www.prnewswire.com. Retrieved 2016-08-17. 
  25. ^ "DOJ settles with 450 hospitals for $250M over False Claims Act allegations | FierceHealthcare". www.fiercehealthcare.com. Retrieved 2016-08-17. 
  26. ^ "Whistleblower lands $1.9 million in suit against CHS - Nashville Business Journal". Nashville Business Journal. Retrieved 2016-12-06. 
  27. ^ "Tennessee firm sells South Jersey hospital": Philadelphia Business Journal on December 1, 2015, author John George
  28. ^ Brubaker, Harold. "Sale of Memorial Hospital of Salem County approved": The Philadelphia Inquirer, February 2, 2017. Accessed April 16, 2017.
  29. ^ "What's next after N.J. hospital sale gets key approval from state": NJ.com on February 2, 2017, author Bill Gallo Jr.
  30. ^ Ellison, Ayla. "CHS executives ink $60M settlement in investor suit". www.beckershospitalreview.com. Retrieved 2017-07-24. 
  31. ^ Ellison, Ayla. "Quorum closes investigation into spinoff from CHS: 6 things to know". www.beckershospitalreview.com. Retrieved 2017-06-30. 
  32. ^ Rege, Alyssa. "Lutheran Health executive resigns, claims CHS forced physician group to disband". www.beckershospitalreview.com. Retrieved 2017-07-14. 
  33. ^ "Chuck Surack, Tom Kelley quit Lutheran Health boards to protest ownership - News-Sentinel.com". News-Sentinel.com. Retrieved 2017-07-14. 
  34. ^ "GUEST COLUMN: What really happened with Community Health Systems - News-Sentinel.com". News-Sentinel.com. Retrieved 2017-07-14. 
  35. ^ "Community Health Systems' stock price falls 11% in two days after rumors of hiring debt adviser". Modern Healthcare. Retrieved 2018-03-15. 
  36. ^ Becker's Revenue Cycle Management Report (12/11/2017)

Further reading[edit]

External links[edit]