If there is one place where Community Health Systems might have expected unalloyed support these days, it is among executives and employees from its investor-owned hospital peers in the Nashville-area.

Community's hostile pursuit of Tenet Healthcare Corp. ended this week, and while Community might not be popular in healthcare circles in Tenet's Dallas home or in union offices around the country, the Franklin, Tenn., company would have counted on the support of what a Modern Healthcare headline called “The Nashville Network” in 2007. (Of course, some in the Dallas-area healthcare community already resented Community for its acquisition of Triad Hospitals, Plano, Texas, in 2007, in which Community outbid a management-led private equity buyout of Triad.)

Instead, in talking to attendees at a Nashville Health Care Council luncheon this week, I heard quite a bit of resentment of Community for mounting the takeover battle with Tenet. Community made an unsolicited offer valued at $7.3 billion (including assumed debt) in November went public with that offer in December after Tenet rejected it, and then made its final offer of $8.1 billion earlier this month. Tenet rejected all bids.

The thinking goes like this: Community's overtures led to Tenet filing a federal securities lawsuit against Community on April 11. The lawsuit in U.S. District Court in Dallas alleges that Community failed to disclose its legal and reimbursement risk related to its low rate of observational visits for Medicare patients. That lawsuit, which is still pending, cast a pall on the entire investor-owned hospital industry that battered share prices for just about everyone, not just Community.

And, as one non-Nashville attendee told me, the public bickering between Community and Tenet and the lawsuit once again paint the entire investor-owned sector in a bad light, just as past Medicare fraud investigations have. This attendee, I should add, seemed more disappointed with Tenet's filing of the lawsuit than with Community's actions.

Wylly

During the healthcare council's “Financing the Deal” luncheon on Tuesday, the moderator, Tom Wylly, senior partner at Brentwood Capital Advisors, at least was able to quip about Community coming up short. Wylly mentioned the Nashville Predators being eliminated from the National Hockey League playoffs the previous night, massive flooding in Memphis just a year after Nashville's own devastating floods, the Kentucky Derby win of long-shot horse Animal Kingdom and then the Community-Tenet battle.

“What we need is some good news,” Wylly said, drawing a laugh from the crowd.

Wylly and his panelists seemed to think that plenty of good news was ahead for hospitals and other healthcare service providers. Andrew Bhak, managing director for healthcare investment banking at Morgan Stanley, noted that stock investors initially bid up the shares of Community and long-term acute-care provider Kindred Healthcare when they announced major acquisition activity. (Kindred, Louisville, Ky., is closing in on a $1.3 billion purchase of RehabCare Group.) Equity investors don't see organic growth, so they are responsive to deal-driven growth, Bhak said.

Rob DiGia, global head of healthcare banking for UBS Investment Bank, predicted that healthcare services will shift from being payer-centric to provider-centric because providers are the organizations that can truly manage care. As a result, he said, providers will need to improve their ability to manage financial risk.

DiGia also said that investors, if not Republican politicians, have moved beyond healthcare reform. “It's in the rearview mirror,” he said. Companies are no longer holding on to their cash waiting to see whether and how reform will play out but are now investing that cash, DiGia said. Perhaps the clearest sign that equity investors have moved on, DiGia said, is that they bid up the share prices of health plans to 10 to 12 times expected earnings, a sharp rebound from the depths of the reform debate, when insurers could be had at a price-to-earnings multiple of six times.

Vince Galloro covers investor-owned hospital chains and the Federation of American Hospitals. Twitter: @MHvgalloro