- Community Health Systems rejected a $2.4 billion offer from a physician-led group to buyout much of Lutheran Health Network, Modern Healthcare reported.
- The physician-led group offered to buy eight hospitals in Fort Wayne, IN, a move about 100 medical professionals at Lutheran Hospital voted unanimously to support because they have "no confidence" in CHS to make decisions in the interests of patients, staff and the community.
- The system, which owns more than 150 hospitals in the U.S., stated the offer was at least $1 billion below a satisfactory offer.
This may not be the last we hear of this potential sale. On one hand, CHS rejected the offer, believing it not to be a good deal for its valued assets. On the other hand, the system could use the money and the physician-led group clearly wants out of the system.
The company is in some serious debt, $14.8 billion by the end of last year. CHS announced in February it is looking to divest more than two-dozen hospitals this year, in which the company lost $1.7 billion. CHS recently completed the sale of nine hospitals.
CEO Wayne Smith, however, said during a company earnings call earlier this month that there will be less of a focus on hospitals sales going forward. "There may be one or two more (divestitures), but we're not specifically thinking about doing anything significant for the rest of the year," he said.
The Lutheran deal wasn't part of the original divestiture plan. In fact, Lutheran Health Network announced a $500 million plan to invest in the system earlier this month, and the network is profitable for the company. CHS reconfirmed its commitment to the upgrade investment after the buyout was rejected.
Still, Fort Wayne Physicians, the physician-led group interested seeking to purchase the assets, have been very vocal over its opposition to CHS' management. The group has stated it would rather profits go back into the community rather than to its current parent company. City Councilman John Crawford told WANE.com that patient care would be better with local ownership.
The Journal Gazette noted one social media rallying message before the rejection stated, "Come show your support for our patients, physicians, employees and community to tell CHS their offer of $500 million is too little, too late. CHS, please leave our community! Trust is earned. Not purchased."
“Hopefully negotiations can start up again because once you say no it doesn’t mean you will say no to the next offer," Crawford told WANE.com.
While the bid was rejected, clearly both parties have something to gain through the deal. A new offer could reinvigorate negotiations.