CHS aims to shed at least 20 more hospitals to reduce debt load

Franklin, Tenn.-based Community Health Systems has been on a hospital divestiture spree for the past year, and the company will continue selling off hospitals in 2018.

To improve its finances and reduce its heavy debt load, CHS put a turnaround plan into place in 2016. As part of the initiative, the company announced in early 2017 it intended to sell off 30 hospitals. CHS completed its 30-hospital divestiture plan Nov. 1.

With the help of proceeds from the hospital sales, CHS brought down its long-term debt load to $13.9 billion in the third quarter of 2017 from $14.8 billion in the same period of 2016. To further reduce its debt, CHS plans to sell another group of hospitals with combined revenue of $2 billion.

In a presentation to investors at the J.P. Morgan Healthcare Conference in San Francisco Jan. 10, CHS Chairman and CEO Wayne Smith discussed the hospital divestiture spree and how the company's strategy has changed in recent years. CHS previously focused on mergers and acquisitions for growth, and the company owned more than 200 hospitals at one point. However, the company is now focused on improving operations at a much smaller number of facilities.

CHS currently owns, operates or leases 127 hospitals in 22 states. Mr. Smith is not sure how many hospitals the company will own after the divestiture plan is completed, but the goal is to have "theoretically around 100 hospitals that are in significantly improved markets that have sustainability," he said at the conference.

CHS ended the third quarter of 2017 with a net loss of $110 million on revenues of $3.67 billion. That's compared to the same period of 2016, when the company recorded a net loss of $79 million on revenues of $4.38 billion.

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