Community Health Systems CEO says chain nearing end of hospital selling spree
Hospital chain Community Health Systems announced a net loss of $167 million in the second quarter of 2019 as they continue to sell off hospitals to stem losses.
The company said in a release that net revenue for the first half of 2019 was $6.67 billion, a nearly 8% decrease compared with the same period last year. Overall the company lost $285 million over the first six months of the year compared with a $135 million loss over the same period in 2018.
Community Health executives also signaled to investors that it is going to wind down its hospital selling spree in the near future.
The health system based in Franklin, Tenn., has struggled with low admissions throughout 2019. In the first quarter of the year, the health system had a 13.4% decrease in total admissions and a 12.8% decrease in total adjusted admissions compared with the first quarter of 2018.
Community Health reported on Monday that the total and adjusted admissions for the first half of the year declined 12.5% compared to the first half of 2018.
However, there are some bright spots for Community Health. Admissions increased 2.3% on a same-store basis in the second quarter compared to 2018's second quarter. Adjusted same-store admissions this quarter also increased by 1.3% compared to 2018.
Part of Community Health’s strategy to turn around the system is to divest facilities not in valuable markets. The company operates more than 100 acute care hospitals across 18 states.
Community Health said that it sold two hospitals on Aug. 1, bringing the total number of hospitals divested in the first six months of 2019 to seven. It sold off 11 facilities in 2018.
But CEO Wayne Smith told investors during a call on Tuesday that Community health is nearing the end of its divesture effort. He added that overall the company is expected to generate $2 billion in net revenue from the full divesture program.
"We have done really well," he said. "We will announce the end of [the program] in the relatively near future."
The company is also looking forward to getting higher payments for some hospitals via a change in the wage index payment system proposed by the Trump administration last week. The change would boost payments for certain low-wage hospitals, especially those in rural areas.
"We have approximately 40 hospitals that benefited" from the change, said Community Health President Tim Hingtgen on the call.