CHS completes sale of nine hospitals as it continues to trim debt
Franklin, Tenn.-based Community Health Systems recently completed the sale of nine hospitals, part of the troubled hospital chain's plan to divest 30 hospitals and offload debt.
CHS divested four hospitals in Pennsylvania to PinnacleHealth System including the 165-bed Carlisle Regional Medical Center, 214-bed Lancaster Regional Medical Center, 148-bed Heart of Lancaster Regional Medical Center in Lititz and 100-bed Memorial Hospital in York. It still operates 11 hospitals in the state.
The health system also completed the sale of Rockwood Health System to MultiCare Health System including the 388-bed Deaconess Hospital, the 123-bed Valley Hospital in Spokane Valley and the multi-specialty Rockwood Clinic, all in Washington, where it now operates two hospitals.
CHS also sold the 88-bed Lake Area Medical Center in Lake Charles, La., where it still runs two hospitals, to Christus Health. It sold the 350-bed Tomball Regional Medical Center in Tomball, Texas, and 67-bed South Texas Regional Medical Center in Jourdanton, Texas, to HCA Healthcare. CHS continues to operate 13 hospitals in Texas.
CHS announced its divestiture plans in its first quarter earnings, when it reported a $177 million net loss, down from a $36 million profit over the same period last year. The system had $14.69 billion in debt in the first quarter, down from $14.79 billion the quarter prior.
The system is still reeling from its $7.6 billion acquisition of Health Management Associates and its 70-plus hospitals. It spun off 38 of its hospitals into a separate, independent company called Quorum Health Corp. last year and used some of the $1.2 billion of net proceeds to pay off debt and improve its debt-EBITDA ratio, CHS CEO Wayne Smith said.
"Our current divestiture plan will also allow us to move to a portfolio of hospitals that are better positioned in our markets with better volume growth, higher EBITDA margin, improved cash flow," Smith said in the first quarter earnings call. "This will also allow us to direct future investments in our most attractive markets and regional networks, which provide a higher return on capital."
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