Community Health Systems (CHS) appears to have found another potential acquisition that fits what Wayne Smith, chairman, president and CEO, calls the company's "operating profile." Following significant speculation regarding its interest, the Franklin, Tenn.-based hospital operator has offered $100 million for bankrupt hospital system Forum Health in Youngstown, Ohio, reports the Tribune Chronicle. CHS also proposes investing at least $80 million over five years for facility upgrades.
The last-minute bid from CHS means that a two-bidder auction will occur later this week. In June, Forum signed a purchase agreement with privately owned Nashville, Tenn.-based Ardent Health Services. Ardent offered $69.8 million, as well as planning to invest $50 million to $70 million over five years for system upgrades. Forum's creditors expressed concern that Ardent's bid wouldn't give them adequate return on their investment in a hospital system that had 2008 revenues of $370 million, so they could be pleased with CHS' bid, but not everyone likes Smith's operating profile.
Some local union officials told the Tribune Chronicle they plan to work with whichever company wins the auction. However, labor leaders also held a press conference on Aug. 3 to note their concerns about CHS' labor tactics, reports the Nashville Business Journal. Labor unions that have met with CHS representatives to discuss labor contracts prior to any sale have basically gotten nowhere.
"There has been very little information coming from CHS, said Deborah Bindas, a representative of American Federation of State, County and Municipal Employees. "There is no business plan. There are no answers to labors' questions."
CHS is "hopeful that agreements can be reached," spokeswoman Tomi Galin told the Business Journal. However, the company's track record is somewhat tarnished lately, with labor problems already plaguing CHS in multiple locations nationwide, including New Mexico, Oregon, Pennsylvania and Washington state. UPDATE: FierceHealthFinance readers, for example, report that CHS' Alta Vista Regional Hospital in Las Vegas, N.M., has refused to negotiate with the workers' union since it formed three years ago.
In early July, CHS completed the acquisition of Marion (S.C.) Regional Healthcare System, which includes a 124-bed acute-care hospital and a 92-bed skilled nursing facility. The purchase marked the acquisition of CHS' sixth hospital in South Carolina, giving the company a total of 123 hospitals in 29 states. CHS posted income from continuing operations of $86.3 million on revenues of $3.2 billion for second-quarter 2010 ended June 30.
To learn more:
- read these Tribune Chronicle articles: article 1 and article 2
- read this Nashville Business Journal article
- read these CHS press releases: release 1 and release 2