Franklin, Tenn.-based Community Health Systems does not expect to feel immediate financial ramifications from the One Big Beautiful Bill Act that was recently passed July 4.
During the system’s second-quarter earnings call, President and CFO Kevin Hammons said, based on analysis, changes to state-directed payment programs will be phased in from 2027 to 2038.
“We project the combined impact from lowering the provider tax threshold and the phase-down to Medicare-linked rates across CHS states will reduce EBITDA by approximately $300 million to $350 million cumulatively over the next 13 years, with no impact in 2025 or 2026, and an immaterial impact in 2027,” Mr. Hammons said.
A Congressional Budget Office July 21 report estimated the number of uninsured people will increase by 10 million by 2034 due to the legislation. Another CBO report found Medicaid spending could decrease by nearly $1 trillion under the legislation.
Mr. Hammons also touched on the Rural Health Transformation Fund embedded in the legislation, which will provide $50 billion over five years in an attempt to support rural healthcare systems. He estimated that around 40% of CHS beds could qualify for rural designation, but cautioned that uncertainty around the fund distributions, split between individual state discretion and CMS, blocks any assumptions being made in existing guidance.
“I also understand that there’s been a proposed bill in the Senate to increase the amount from $50 billion to $100 billion,” he said. “Even that isn’t entirely clear because throughout the medical regulations and CMS, there’s multiple definitions of what is rural, and I’m not sure which is the exact one that will apply here. We’re giving our best estimate, [which] is about 40% of our beds.”
The health system also plans to “aggressively pursue” administrative and legislative fixes to the legislation in the coming months.
CHS CEO Tim Hingtgen also addressed his planned Sept. 30 retirement during the earnings call, which will see Mr. Hammons step in as interim CEO, and Jason Johnson, CHS senior vice president and chief accounting officer, becomes interim CFO.
“After thinking about it a lot and consulting with my family, this is the appropriate decision,” Mr. Hingtgen said. “Let’s call it a difficult, honest and, for me, a necessary choice. I’ll be here until the end of September to support a seamless transition, but truthfully, Kevin could step into the role of CEO today, and things would be just fine.”
The health system saw its operating income surge to $512 million (16.3% operating margin) in the second quarter of 2025, up from $238 million (7.6% margin) during the same period in 2024. Net operating revenue was $3.13 billion and operating expenses were $2.6 billion.
