Community Health Systems shed both money and hospitals in large quantities last year, and it still appears far from setting a clear course for the future.
CHS reported a whopping loss for the fourth quarter of 2017: $2.01 billion, although the company attributed $1.7 billion of that to write-downs associated with asset impairments. It recorded an impairment charge of $1.4 billion on the value of goodwill for its hospital reporting unit, as well as an impairment charge of $341 million to reduce the value of assets at hospitals that CHS has sold.
In addition, the company reported a net loss of $2.38 billion for 2017 on revenue of $15.35 billion. Its operations were hit hard last year by Hurricanes Harvey and Irma, contributing in part to a 19.2% drop in admissions last year compared to 2016, and a 1.7% drop among hospitals that remain in the CHS fold. The overall bed occupancy rate hovered just below 43%.
The Tennessee-based system sold 30 hospitals in 2017, including eight in the fourth quarter, a move that cut its holdings from 155 acute care facilities to 125 and represents about 5,400 beds in all. CHS sold 85-bed Tennova Healthcare in Tennessee in late January, and company officials said more sales will occur in 2018.
CHS’ guidance projects a loss of $117 million to $124 million for this year.
Despite the financial losses, CEO Wayne Smith was optimistic about the future of the company, noting in a statement that the company was “strategically expanding outpatient services.” However, neither he nor the company provided any specifics in its earnings release or its filing with the Securities and Exchange Commission. Data suggested that the company’s outpatient business barely budged last year: Outpatient services comprised 56.8% of revenue in 2017, up barely from 56.6% in 2017. CHS does not break out specific revenue or profitability figures for its outpatient businesses.
CHS’ opaque strategy appears to be at odds with that of another money-losing hospital operator, Tenet Healthcare Corp. Although Tenet has also sold several hospitals, it has provided much more guidance as to how it would continue to invest heavily in ambulatory surgical centers.
CHS has also come under criticism recently for its management and losses, with ASL Strategic Value Fund asking last year for Smith’s ouster as CEO. It has also come under fire for the management practices at its most profitable facilities, with doctors who practice there saying CHS overcharges for care.