Don't expect LifePoint Health to be one of the bidders for the 17-plus hospitals that Community Health Systems in selling.
Speaking to analysts this week at the Citi 2016 Global Healthcare Conference, LifePoint CEO Bill Carpenter said his company prefers to buy not-for-profit hospitals that can benefit from new service lines and tighter controls over quality and costs.
Without specifically naming CHS, Carpenter said “brethren” investor-owned hospital systems are selling hospitals that are already well-managed and are less likely to produce big future margin improvements from new management systems and capital.
Consequently, LifePoint would rather pursue the many available stand-alone, not-for-profit hospitals and small systems that it can help turnaround operationally and take margins from the single to double digits within three years, Carpenter said.
"We have the ability to acquire hospitals that have not had that level of management experience,” he said.
Brentwood, Tenn.-based LifePoint owns 72 non-urban hospitals in 22 states either on a wholly-owned basis or through a joint venture with Duke University Health System. The joint venture is known as Duke LifePoint.
CHS of Franklin, Tenn., is shedding hospitals and other assets to try to reduce a staggering $15 billion debt. At the same Citi healthcare conference this week, CHS CFO Larry Cash said the company has found seven buyers for 17 of its hospitals and more than that number is likely to be sold soon.
LifePoint has been quiet on the acquisitions front since buying Providence Hospitals in February, a two-hospital Catholic system in Columbia, S.C. That concluded a two-year shopping spree that saw LifePoint add about $2 billion in hospital revenue to the system.
In the nine months ended Sept. 30, LifePoint posted net income of $85.2 million on revenue of $4.76 billion.
Carpenter said LifePoint will continue to be very picky about acquisition targets, though there is a large pipeline of hospitals looking for partners.
At the Citi program, COO David Dill said LifePoint has a history of helping acquired hospitals improve their performance.
LifePoint listens to physicians, employees and the community to see what service lines they would like to see added or expanded, including specialties or patient access points, Dill said.
Then a plan is developed to add patient quality and safety processes to get that right as capital is deployed for expansion, information technology and other efforts to improve the productivity of clinicians and employees.
Dill noted that it is the desire of LifePoint to increase employment at the acquired hospitals, not decrease it, through increased hospital and outpatient volumes.