Community Health Systems

Last updated
Community Health Systems, Inc.
Public
Traded as NYSE:  CYH
S&P 600 Component
Industry Health care
Founded1985
FoundersRichard Ragsdale
David Steffy
Headquarters,
Key people
Wayne T. Smith (CEO)
Thomas J. Aaron (CFO)
RevenueDecrease2.svg $18.438 billion (2016)
Decrease2.svg $(860 million) (2016)
Decrease2.svg $(1.71 billion) (2016)
Total assets Decrease2.svg $(21.9 billion) (2016)
Total equity Decrease2.svg $(1.615 billion) (2016)
Number of employees
Decrease2.svg 120,000
Website http://www.chs.net/

Community Health Systems 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] As of December 31, 2016, it owns, leases or operates 158 hospitals in 22 states. [4]

<i>Fortune</i> 500 Annual list compiled and published by Fortune magazine

The Fortune 500 is an annual list compiled and published by Fortune magazine that ranks 500 of the largest United States corporations by total revenue for their respective fiscal years. The list includes publicly held companies, along with privately held companies for which revenues are publicly available. The concept of the Fortune 500 was created by Edgar P. Smith, a Fortune editor, and the first list was published in 1955. The Fortune 500 is more commonly used than its subset Fortune 100 or superset Fortune 1000.

Franklin, Tennessee City in Tennessee, United States

Franklin is a city in, and the county seat of, Williamson County, Tennessee, United States. About 21 miles (34 km) south of Nashville, it is one of the principal cities of the Nashville metropolitan area and Middle Tennessee. As of 2017, its estimated population was 78,321, and it is the seventh-largest city in Tennessee.

Contents

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. [5] 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. [6]

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. [7]

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. [8]

The company made its initial public offering in 1991. In 1996, the company was purchased by private equity firm Forstmann Little & Company. [9] Community Health Systems went public again in 2000. [10] In August 2003, the company acquired Southside Regional Medical Center. [11] On October 10, 2015, the 372-bed Grandview Medical Center began operating in Birmingham, Alabama, replacing Trinity Medical Center. [12]

Forstmann Little & Company

Forstmann, Little & Company was a private equity firm, specializing in leveraged buyouts (LBOs). At its peak in the late 1990s, Forstmann Little was among the largest private equity firms globally. Ultimately, the firm would suffer from the bursting of the internet and telecom bubbles, having invested heavily in technology and telecommunications companies. Following the death of the last surviving founder, Theodore Forstmann, in 2011, the firm was dissolved and its assets sold off. It closed in May 2014.

Initial public offering (IPO) or stock market launch is a type of public offering in which shares of a company are sold to institutional investors and usually also retail (individual) investors; an IPO is underwritten by one or more investment banks, who also arrange for the shares to be listed on one or more stock exchanges. Through this process, colloquially known as floating, or going public, a privately held company is transformed into a public company. Initial public offerings can be used: to raise new equity capital for the company concerned; to monetize the investments of private shareholders such as company founders or private equity investors; and to enable easy trading of existing holdings or future capital raising by becoming publicly traded enterprises.

Southside Regional Medical Center is a 300-bed hospital near the Petersburg, VA tri-cities, VA area. The hospital was originally started in 1948 by the city of Petersburg, but was sold to Community Health Systems in 2003 and relocated. The hospital is designated as a Level III Trauma Center by the Virginia Department of Health.

In 2000, Community Health Systems paid $31 million to the United States Department of Justice to settle a review of its billing practices. [13]

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. [14] [15] [16]

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. [17] 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. [18]

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. [19]

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. [20] The merger was completed in January 2014 and made Community Health Systems the largest for-profit hospital operator at the time, [21] with 206 hospitals in 29 states. [22] 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. [23]

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." [24] 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. [25]

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." [26] The allegations were brought about by a former CHS employee in a complaint under the False Claims Act. [27]

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. [28]

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. [29]

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

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. [33]

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. [34]

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. [35] [36] [37]

On March 13th, 2018 it was reported that the Company had hired financial advisory firm Lazard to help address long-term debt. [38]

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References

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