In addition to selling hospitals to reduce debt, Community Health Systems is trying to find the right number of physicians to optimize productivity, Chief Financial Officer Larry Cash told analysts Tuesday at the Credit Suisse 25th Annual Healthcare Conference.
CHS, of Franklin, Tenn., went on a physician-recruiting binge last year, bringing in a record 4,152 more physicians systemwide compared with the 3,765 recruited in 2014, Cash said.
The hospital chain was recruiting physicians to staff its more than 1,000 clinics as well as jump-start volumes at some underperforming hospitals. Those include former Health Management Associates hospitals in Florida that CHS had acquired in 2014, Cash said.
But now CHS is scaling back its recruitment (PDF), Cash said. CHS is putting more management resources into the practices to optimize scheduling and improve throughput.
Cash admitted that CHS “didn't manage” the physicians well.
This year, physician recruiting was down about 20% in the first half of 2016 and it will be down another 30% in the second half. Through Sept. 30, CHS had brought aboard 3,046 physicians compared with 3,201 over the same nine months of last year.
Cash also told Credit Suisse analysts that CHS expects to sell more hospitals than are currently on the market. CHS has a total of 158 hospitals in 22 states.
He said every quarter, “the bar” for total hospital divestitures has risen. CHS expects to raise $1.2 billion in net proceeds from the sale of the 17 hospitals, the sale of ambulatory center real estate and 80% of the company's home health business.
CHS is selling assets to reduce a crushing $15 billion debt that is among the industry's highest at about 6.5 times earnings before interest, taxes, depreciation and amortization. In contrast, HCA's debt is 3.9 times EBITDA.
CHS has tried other ways to get into better financial standing. Earlier this year, it spun off 38 rural hospitals and sold its stake in a joint venture of four hospitals in Las Vegas. The former raised $1.2 billion. The Las Vegas deal brought in $445 million.