Community Health Systems
| Company type | Public company |
|---|---|
| Industry | Healthcare |
| Founded | 1985 |
| Founder | E. Thomas Chaney, David Steffy, Richard Ragsdale |
| Headquarters | Franklin, Tennessee , United States |
Area served | United States |
Key people | Wayne T. Smith (CEO) |
| Products | General hospital services |
Community Health Systems (CHS) is a healthcare corporation listed among the Fortune 500 companies, with its main offices located in Franklin, Tennessee. Previously recognized as the largest provider of general hospital services in the United States based on the number of acute care facilities, CHS operated close to 200 hospitals in 2014. However, by 2021, this figure had decreased to roughly 85.
In August 2015, CHS revealed intentions to separate 38 hospitals and its management division, Quorum Health Resources, into a newly formed publicly traded company named Quorum Health Corporation. This separation was finalized in April 2016. Quorum concentrated on hospitals situated in smaller markets spanning 16 states but ultimately filed for bankruptcy in April 2020 and was delisted from the NYSE.
On October 3, 2016, CHS transitioned from the S&P Midcap 400 index to the S&P Smallcap 600. Since the year 2000 under CEO Wayne T. Smith’s leadership, the company’s stock price has declined by more than 76%. In 2017, Chinese billionaire Tianqiao Chen owned a 22.2% share of CHS.
Founding and early years (1985–2010)
Community Health Systems was established in 1985 by E. Thomas Chaney, formerly an executive at Hospital Affiliates, Inc., together with David Steffy and Richard Ragsdale, who had previously held executive roles at Republic Health Corporation—a spin-off of Hospital Corporation of America. The company went public for the first time in 1991 and was acquired by private equity firm Forstmann Little & Company in 1996 before returning to public markets in 2000.
CHS expanded its operations in August 2003 by acquiring Southside Regional Medical Center. On October 10, 2015, it inaugurated the Grandview Medical Center in Birmingham, Alabama, a facility with 372 beds that replaced Trinity Medical Center.
In a settlement with the Department of Justice in 2000, CHS paid $31 million related to an investigation into its billing practices.
A significant expansion occurred in 2007 when CHS acquired Plano-based Triad Hospitals for $6.8 billion. This acquisition nearly doubled CHS’s size by adding approximately 50 hospitals along with Quorum Health Resources, its consulting arm. Notable facilities included McKenzie-Willamette Hospital in Oregon, Trinity Medical Center in Alabama, and seven Lutheran Health Network hospitals in Indiana.
By 2010, workforce reductions and cuts to employee benefits at McKenzie-Willamette prompted union grievances concerning deteriorating patient care and working conditions. The union pointed out that profits had tripled since the hospital’s conversion from non-profit to for-profit status under CHS ownership while charitable services and benefits had diminished.
Recent developments (2011–present)
In 2011, Tenet Healthcare accused Community Health Systems of Medicare overbilling driven by aggressive patient admissions policies; subsequently, Medicare subpoenaed CHS regarding its billing methods.
CHS agreed to acquire Health Management Associates (HMA) in 2013 for roughly $3.6 billion through cash and stock transactions. The merger closed in January 2014, positioning CHS as the largest for-profit hospital operator with ownership of 206 hospitals across 29 states. Nevertheless, this acquisition brought legal challenges due to lawsuits and criminal investigations tied to fraudulent Medicare claims associated with HMA; CHS resolved these issues with a $262 million settlement in October 2018.
On August 4, 2014, CHS paid $95.14 million to settle allegations with the U.S. Department of Justice concerning improper inpatient billing for services that should have been coded as outpatient or observation care. This agreement included a corporate integrity commitment mandating enhanced compliance efforts.
In August 2014, CHS disclosed a data breach affecting approximately 4.5 million patients that exposed sensitive personal information; affected individuals were offered complimentary identity theft protection services.
In February 2015, following a whistleblower complaint under the False Claims Act, CHS paid $75 million to resolve accusations of unlawful donations to county governments intended to boost federal Medicaid reimbursements. An additional $13 million settlement addressing related False Claims Act allegations was made in October that same year.
CHS sold Memorial Hospital of Salem County in New Jersey to Prime Healthcare Foundation after obtaining regulatory approval early in 2017.
A former CFO at a CHS hospital was awarded $1.9 million in December 2016 after winning a whistleblower lawsuit alleging wrongful termination for refusing to falsify financial records.
In January 2017, investors settled claims against CHS executives for breach of fiduciary duty with a $60 million agreement.
During March 2017, Quorum Health’s board conducted an inquiry into potential fraudulent activities concerning financial forecasts involving CHS but found no definitive proof; the projections were characterized as poorly prepared at best.
Between April and July of that year, CHS declined purchase offers from physicians within Lutheran Health Network for their profitable network amid accusations that CHS management had underinvested; following this period, several senior hospital leaders either resigned or were dismissed.
In March 2018, CHS engaged financial advisory firm Lazard to assist with addressing its long-term debt issues.
On August 1, 2018, Munroe Regional Medical Center located in Florida was sold by CHS to AdventHealth. Two more Florida hospitals owned by CHS affiliates were agreed for sale to AdventHealth in May of the following year.
By December 2019, three Virginia hospitals were sold by CHS effective January 2020.
Throughout the COVID-19 pandemic period, CHS received around $250 million from federal relief programs. Despite this influx of funds, between March 2020 and May 2021 the company initiated over 19,000 lawsuits against patients over unpaid medical bills—including many cases involving hospitals no longer owned by CHS—raising questions about its operational approach and patient relations strategy.
In April 2020, CHS consented to sell its controlling interest in St. Cloud Regional Medical Center in Florida to Orlando Health; later that year Orlando Health also completed acquisition of Bayfront Health St. Petersburg.
According to its annual Form 10-K filing for fiscal year ending in 2019, key markets for CHS included Florida, Texas, and Indiana. The total number of hospitals under its management dropped from nearly 200 in 2014 to about 85 by early 2021.
Despite divesting numerous facilities during the pandemic years, CHS reported its most profitable year since at least a decade ago in fiscal year 2020. Nevertheless, its aggressive legal actions against patients have drawn criticism concerning leadership practices and influence within healthcare markets.
Aggressive lien strategies
CHS hospitals have faced legal action for reportedly prioritizing lien filings over direct billing to health insurance providers, resulting in significant charges imposed on patients.
External links
- Community Health Systems
- Companies listed on the New York Stock Exchange
- Health care companies based in Tennessee
- Hospital networks in the United States
- Companies based in Franklin, Tennessee
- American companies established in 1985
- Hospitals established in 1985
- 1985 establishments in Tennessee
- 1991 initial public offerings
- 1996 mergers and acquisitions
- 2000 initial public offerings
- Companies of the United States by year of establishment