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For-profit health systems' selling spree continues

The Franklin, Tenn.-based Community Health Systems announced April 18 it entered into a definitive agreement to sell 351-bed Tennova Healthcare-Cleveland (Tenn.) to Hamilton Health Care System in Dalton, Ga., for $160 million in cash. 

The deal is expected to close in the third quarter of 2024, and it is the last deal the system expects to complete this year.

"We believe that one or more additional transactions could close within the calendar year, providing substantial capital for the company to redeploy," CHS CFO Kevin Hammons said on the company's April 25 earnings call, according to a Seeking Alpha transcript. 

Mr. Hammons also said on the call they are continuing to evaluate "opportunities for further divestitures across a handful of markets that could total more than $1 billion in total proceeds," reiterating a plan health system officials mentioned during the previous earnings call Feb. 21. CEO Tim Hingtgen said on that call that proceeds from divestitures "enable a variety of positive activities such as targeted investments in core markets, funding potential future acquisitions and increased flexibility in debt management."

"We have modeled several attractive scenarios but will remain extremely disciplined in our decision-making as it relates to divestitures, acquisitions and ensuring that our core portfolio is strong and positioned for long-term success," Mr. Hingtgen said. 

Among the transactions CHS is hoping to close this year is a deal to sell two of its North Carolina hospitals to Winston-Salem, N.C.-based Novant Health, but the Federal Trade Commission in January sued to block the move. North Carolina Treasurer Dale Folwell has backed the FTC's bid to block the sale.

CHS and Dallas-based Tenet Healthcare have shrunk their hospital portfolios over the past several years. CHS operated 102 hospitals in 2019, a figure that decreased to 71 by the end of 2023. Tenet went from 65 to 61 over that span and has been active in 2024. So far this year, Tenet has sold nine hospitals to three health systems in California and South Carolina for more than $3.9 billion. 

Even Nashville, Tenn.-based HCA Healthcare — which grew its hospital portfolio from 179 hospitals in 2019 to 186 in 2023 — has offloaded a hospital in 2024. The system completed a deal to sell Los Angeles-based West Hills Hospital and Medical Center to Los Angeles-based UCLA Health on March 29. HCA has also added a hospital this year, completing its acquisition of Trinity Regional Hospital Sachse (Texas) from Sunland Medical Foundation on Feb. 1. 

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