Community Health Systems, a nationwide hospital and health system operator based out of Tennessee, has been having its struggles of late, divesting hospitals at a speedy clip in order to pay down its considerable debt. Adding to those headaches, however, are recent reports that two of its key locations are struggling with quality and satisfaction among both doctors and patients -- even as the value of its bonds are on the rise.
According to a report in Bloomberg, doctors at a CHS-owned health system in Fort Wayne, Indiana has tried to band together and buy the company out, complaining of neglect and poor quality. The 400-bed Lutheran Hospital, the Indiana system's anchor facility, has received much lower patient satisfaction scores than a cross-town rival, and patients have complained about cleanliness, despite $400 million in upgrades invested in by CHS since it acquired Lutheran in 2007.
Meanwhile, CHS' hospital in Key West, Florida -- another top financial performer for the company -- is the target of complaints that it's overcharging patients. CHS told Bloomberg it's pumping $20 million into infrastructure at Lower Keys Medical Center, and quality measures and patient satisfaction have been improving. But the hospital raked in an average or more than $13,000 per patient last year; the median at CHS' 21 Florida hospitals is $8,269.
The beleaguered status of these holdings comes as CHS is divesting 10 of its low-performing hospitals in a bid to reduce its debt by about $975 million. CHS also recently ended a joint venture with Universal Health Services in Las Vegas, and spun off 38 hospitals to Quorum Health to reduce its debt by an estimated $1.2 billion. Bloomberg reported that CHS' debt currently stands at about $15 billion.
CHS has been shedding hospitals feverishly of late. In February the company sold eight hospitals located in Florida, Ohio and Pennsylvania, to Steward Health Care for an undisclosed price. And the system sold 10 medical office buildings to real estate company HCP Inc. for $163 million just before Christmas. Earlier in December, CHS announced its intention to sell two hospitals in Washington for $45 million, adding to the 17 hospitals that were already on the block as of November. CHS also divested two Texas hospitals earlier this spring for an undisclosed amount.
Despite these troubles, Bloomberg reported that CHS' bonds are rising in value, indicating debtholders believe the company may turn around financially.
That may depend on how the Indiana and Key West operations fare, however -- together, they account for about 16 percent of CHS' adjusted earnings.