Community Health Systems

U.S. healthcare company

This article needs to be updated. Please help update this article to reflect recent events or newly available information. (August 2023)

|

Community Health Systems, Inc.

Company type| For-profit corporation

Traded as

| NYSE: CYH
Industry| Health care
Founded| 1985
Founders| Richard Ragsdale
David Steffy
Headquarters|

Franklin, Tennessee

United States

Key people

| Wayne T. Smith (Chairman)
Tim Hingtgen (CEO)
Kevin Hammons (CFO)
Revenue| $12.490 billion (2023)

Operating income

| $957 million (2023)

Net income

| $(133 million) (2023)
Total assets| $14.4 billion (2023)
Total equity| $(1.392 billion) (2023)

Number of employees

| 61,000
Website| http://www.chs.net/

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] In 2014, CHS had around 200 hospitals,[4] but the number had declined to around 85 in 2021.[5]

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. In April 2020 Quorum declared bankruptcy and is no longer trading on the NYSE.[7] [8]

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.[citation needed]

Chinese billionaire Tianqiao Chen had a 22.2 percent stake in Community Health Systems in 2017.[9]

## 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.[10]

The company made its initial public offering in 1991. In 1996, the company was purchased by private equity firm Forstmann Little & Company.[11] Community Health Systems went public again in 2000.[12] In August 2003, the company acquired Southside Regional Medical Center.[13] On October 10, 2015, the 372-bed Grandview Medical Center began operating in Birmingham, Alabama, replacing Trinity Medical Center.[14]

In 2000, Community Health Systems paid $31 million to the United States Department of Justice to settle a review of its billing practices.[15]

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.[16][17][18]

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.[19] 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.[20]

### 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.[21]

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.[22] The merger was completed in January 2014 and made Community Health Systems the largest for-profit hospital operator at the time,[23] with 206 hospitals in 29 states.[24] 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.[25]

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".[26] 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.[27]

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".[28] The allegations were brought about by a former CHS employee in a complaint under the False Claims Act.[29]

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.[30]

After CHS agreed in 2015 to sell Memorial Hospital of Salem County in New Jersey to Prime Healthcare Foundation,[31] a nonprofit affiliated with Prime Healthcare Services;[32] the sale was approved by New Jersey in early February 2017.[33][34]

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.[35]

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.[36]

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.[37]

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.[38][39][40]

On March 13, 2018, it was reported that the company had hired financial advisory firm Lazard to help address long-term debt.[41]

On August 1, 2018, CHS completed the sale of 425-bed Munroe Regional Medical Center in Ocala, Fla., to Altamonte Springs, Fla.-based Adventist Health System.[42]

On May 22, 2019, AdventHealth announced they had signed definitive agreements to purchase 193-bed Heart of Florida Regional Medical Center in Davenport, Florida, and 160-bed Lake Wales Medical Center in Lake Wales, Florida, from affiliates of CHS.[43]

In December 2019, CHS 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.[44]

During the COVID-19 pandemic, CHS received around a quarter-billion in federal COVID-19 relief funds.[5] During the pandemic, CHS-owned hospitals also filed more than 19,000 lawsuits against their patients for unpaid medical bills.[45]

On April 27, 2020, CHS 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.[46]

On September 30, 2020, CHS announced that an affiliate of the company has completed the sale of 480-bed Bayfront Health St. Petersburg and its associated assets to a subsidiary of Orlando Health.[47]

In its annual Form 10-K filed in 2019, it identified Florida, Texas and Indiana as areas of geographic concentration.[48]

In 2014, CHS had around 200 hospitals,[4] but the number had declined to around 85 in 2021.[5]

From March 2020 to May 2021 - during the COVID-19 pandemic - CHS filed more than 19,000 lawsuits against individuals for not being able to pay off their medical debt (some from hospitals it no longer owned) even as the company collected over $700 million in Covid relief funds from the federal government.[49] Many of these lawsuits are against people who cannot pay the legal fees to challenge CHS in court. (Due to the fact that these are civil suits and not criminal suits, the defendants do not receive a state-appointed lawyer.) In 2020, CHS posted its most profitable year in at least a decade.[50]

### Predatory liens practices

[edit]

Lawsuits have been filed against CHS hospitals for alleged predatory liens practices where hospitals file for liens rather than bill individuals' health insurers, resulting in massive fees for patients.[5]

## References

[edit]

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. ^ a b "The collapse of Community Health Systems". Axios. 15 August 2017. Retrieved 2019-06-09.
5. ^ a b c d Kliff, Sarah; Silver-Greenberg, Jessica (2021-02-01). "How Rich Hospitals Profit From Patients in Car Crashes". The New York Times. ISSN 0362-4331. Retrieved 2021-02-03.
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. ^ "Bankruptcy court approves Quorum's $1.3B restructuring plan". www.beckershospitalreview.com. Retrieved 2021-03-16.
8. ^ "Quorum Health is no longer trading on the NYSE". www.bizjournals.com. Retrieved 2021-03-16.
9. ^ Becker's Revenue Cycle Management Report (12/11/2017)
10. ^ "BUSINESS PEOPLE; 3 Hospital Bidders Facing Skepticism". New York Times. 1987-04-13.
11. ^ Freundheim, Milt (2006-06-11). "Forstmann to Acquire Community Health for $1.1 Billion". New York Times.
12. ^ "Stock Offerings Are Set". New York Times. 2000-06-05.
13. ^ "Community Health Systems Acquires Southside Regional Medical Center in Petersburg, Virginia" (Press release). August 4, 2003. Retrieved Jul 26, 2013.
14. ^ "Ten things you need to know about Trinity's move to 280". AL.com. 7 October 2015. Retrieved 2015-12-14.
15. ^ "Community Health Systems ends federal billing review with $31 million settlement". Nashville Post. Retrieved 2016-08-17.
16. ^ "McKenzie-Willamette Hospital finds for-profit backer". Bizjournals.com. Retrieved 22 May 2019.
17. ^ Francis, Theo. "Community Health to Acquire Rival Triad". The Wall Street Journal. ISSN 0099-9660. Retrieved 2015-12-14.
18. ^ "Community Health Systems, Inc". Sec.gov. Retrieved 2015-12-14.
19. ^ "Hospital, union talks heat up - Financial - Eugene, Oregon". Special.registerguard.com. Retrieved 22 May 2019.
20. ^ "McKenzie-Willamette: Profits before Community". Archived from the original on 2014-01-05. Retrieved 2014-01-04.
21. ^ "Community Health Faces Inquiry on Medicare Claims". New York Times. 2011-11-15.
22. ^ De La Merced, Michael J. (30 July 2013). "Community Health Agrees to Buy H.M.A. for $3.6 Billion". The New York Times.
23. ^ Dubois, Shelley (26 January 2014). "Community Health Systems completes purchase of HMA". The Tennessean. Retrieved 15 December 2017.
24. ^ "CHS Completes HMA Acquisition". Beckershospitalreview.com. Retrieved 2015-11-09.
25. ^ McDonald, R. Robin (September 26, 2018). "Georgia Whistleblowers Share in $262M Settlement With Florida Hospital Chain". Daily Report. Retrieved 16 January 2019.
26. ^ "Community Health Systems Inc. to Pay $98.15 Million to Resolve False Claims Act Allegations". Justice.gov. 28 August 2014. Retrieved 2016-08-17.
27. ^ Pagliery, Jose (18 August 2014). "Hospital network hacked, 4.5 million records stolen". CNNMoney. Retrieved 2015-11-09.
28. ^ "Community Health Systems to pay $75 million for alleged New Mexico Medicaid scheme". 16 April 2007. Retrieved 2016-08-17.
29. ^ "Whistleblower played key role in case that Community Health Systems hospitals settle for $75 million". Prnewswire.com (Press release). Retrieved 2016-08-17.
30. ^ "DOJ settles with 450 hospitals for $250M over False Claims Act allegations". Fiercehealthcare.com. 30 October 2015. Retrieved 2016-08-17.
31. ^ "Tennessee firm sells South Jersey hospital": Philadelphia Business Journal on December 1, 2015, author John George
32. ^ "Health System". Prime Healthcare Services. January 29, 2018. Retrieved 2019-06-09.
33. ^ Brubaker, Harold. "Sale of Memorial Hospital of Salem County approved": The Philadelphia Inquirer, February 2, 2017. Accessed April 16, 2017.
34. ^ "What's next after N.J. hospital sale gets key approval from state": NJ.com on February 2, 2017, author Bill Gallo Jr.
35. ^ "Whistleblower lands $1.9 million in suit against CHS - Nashville Business Journal". Nashville Business Journal. Retrieved 2016-12-06.
36. ^ Ellison, Ayla. "CHS executives ink $60M settlement in investor suit". Beckershospitalreview.com. Retrieved 2017-07-24.
37. ^ Ellison, Ayla. "Quorum closes investigation into spinoff from CHS: 6 things to know". Beckershospitalreview.com. Retrieved 2017-06-30.
38. ^ Rege, Alyssa. "Lutheran Health executive resigns, claims CHS forced physician group to disband". Beckershospitalreview.com. Retrieved 2017-07-14.
39. ^ "Chuck Surack, Tom Kelley quit Lutheran Health boards to protest ownership - News-Sentinel.com". News-Sentinel.com. Retrieved 2017-07-14.
40. ^ "GUEST COLUMN: What really happened with Community Health Systems - News-Sentinel.com". News-Sentinel.com. Retrieved 2017-07-14.
41. ^ "Community Health Systems' stock price falls 11% in two days after rumors of hiring debt adviser". Modern Healthcare. Retrieved 2018-03-15.
42. ^ "CHS divests 425-bed Florida hospital". www.beckershospitalreview.com. 2018-08-01. Retrieved 2021-01-04.
43. ^ "AdventHealth Enters into Agreements to Acquire Two Florida Health Care Facilities". www.adventhealth.com. 2019-05-22. Retrieved 2021-01-04.
44. ^ "Community Health Systems Completes Divestiture of Virginia Hospitals". www.bloomberg.com. 2019-12-31. Retrieved 2020-03-26.
45. ^ Casey Tolan (17 May 2021). "'It's been heart-sickening:' A major US hospital chain has sued thousands of patients in the last year". CNN. Retrieved 2021-05-17.
46. ^ "Community Health Systems Announces Definitive Agreement to Sell St. Cloud, Florida Hospital". www.businesswire.com. 2020-04-27. Retrieved 2020-04-29.
47. ^ "Community Health Systems Completes Divestiture of St. Petersburg, Florida Hospital". www.businesswire.com. 2020-09-30. Retrieved 2021-01-04.
48. ^ "Form 10-K". www.sec.gov. 2018-12-31. Retrieved 2019-06-09.
49. ^ "'A Health Care Giant Sold Off Dozens Of Hospitals — But Continued Suing Many Patients'". www.npr.org. 2021-07-28. Retrieved 2021-07-28.
50. ^ "'There's no way I can pay for this:' One of America's largest hospital chains has been suing thousands of patients during the pandemic". www.cnn.com. 2021-05-17. Retrieved 2021-05-17.

## External links

[edit]

* Official website
* Fortune 500 2007: Community Health Systems

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