CHS CEO's 4 priorities to improve financial performance in 2023

Franklin, Tenn.-based Community Health Systems posted $179 million in net income in 2022 — down from $368 million the prior year — but it continues to make progress toward stabilizing volumes, reducing labor costs and offsetting inflationary pressures, executives said during the company's fourth-quarter earnings call on Feb. 16.

"Inflationary pressure continues to impact operating expenses and margins, but we made progress reducing contract labor throughout 2022," CEO Tim Hingtgen said. "We have also managed non-labor expenses below inflation. Excluding pandemic-relief funds, EBITDA performance was at its highest level in the fourth quarter of the year, in line with our expectations as well as historical trends."

Mr. Hingtgen detailed four priority areas that will help drive strong results for CHS' markets and across the health system:

1. Accelerate growth. Strategic capital investments and access points, outpatient services and inpatient capacity will breed near-term volume gain and increase the potential or long-term growth, according to the health system. 

Over the last five years, CHS added more than 640 licensed beds and 80 surgical and procedure suites to its existing health systems. It also plans to continue to expand its geographic footprint and to boost market concentration with primary, specialty and urgent care, freestanding emergency centers and ASCs. 

Recruitment is also a key part of its growth plan with 2022 being its best recruitment year of the last five years. "Our transfer center received a record number of requests for placement last year, which is an important growth driver for many of our health systems. Last year, inbound transfers increased 14.5 percent over the prior year," Mr. Hingtgen said. "As we continue to recruit additional staff and further optimize capacity through our length of stay reduction efforts, we expect even more volume from the transfer center, including incremental higher-acuity admissions."

2. Strengthen workforce. CHS made considerable progress toward decreasing contract labor in 2022 and ended the year with strong gains in employee recruitment and retention. "Contract labor totaled approximately $80 million in Q4, compared to $140 million in the prior year and $100 million last quarter," Mr. Hingtgen said.

Nurse hiring through CHS' systemwide nurse recruitment function was up 18 percent year over year in 2022 and its retention rates improved 500 basis points, which resulted in a strong net gain in nursing FTEs for the year. 

CHS' partnership with Teterboro, N.J.-based Jersey College nursing school added new campuses in Tucson, Ariz., and Scranton, Pa., in January. The system now has seven active programs and expects three more to begin in 2023. One fully deployed, the Jersey College partnership is expected to graduate about 1,000 nurses a year. 

3. Reduce expenses. CHS' work to control expenses includes its initiatives to improve its margins, supply chain and productivity, 

"During 2022, we made positive strides, including measures to consolidate service lines in some markets, creating greater efficiencies in those healthcare systems," Mr. Hingtgen said. "For 2023, we remain focused on incremental contract labor reductions and other specific tactics to mitigate inflationary pressures in the operating environment."

4. Commitment to safety and quality. Mr Hingtgen said there are many measures that demonstrate the system's commitment to safety and quality, but highlighted one program that it established a decade ago to highlight results in this area. 

"In 2012, CHS hospitals embarked on a journey to create inherently safe healthcare systems, and now we have a full decade worth of data that shows how much progress we have made. In 2022, we achieved an 87.9 percent decline in the serious safety event rate from the baseline established 10 years ago," Mr. Hingtgen said. "This equates to thousands of patients who experienced better outcomes as a result of this focus."

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