Dive Brief:
- Community Health Systems will sell three Tennova Healthcare hospitals to West Tennessee Healthcare as the for-profit system moves forward with its divestiture plans.
- CHS hit its mark of 30 divestitures last year, netting $2 billion, and plans to continue selling facilities this year in an effort to reduce debt and focus on growth in its profitable markets.
- The deal with West Tennessee Healthcare will bring the CHS divestiture count in Tennessee, the company's home state, to four this year.
Dive Insight:
In January, CHS CEO Wayne Smith told investors that his goal is to have 100 hospitals in “significantly improved markets.” These three most recent divestments make five so far for the year following a separate divestiture in Tennessee in January and one in Louisiana in February. All five are expected to close in the second quarter.
CHS recently brought on financial advisors to help restructure the company's $13.8 billion debt, much of which was acquired when the company bought the financially-distressed Florida-based system Health Management Associates for $7.6 billion acquisition in 2014.
The three Tennova hospitals include a 225-bed facility in Dysersburg, a 150-bed facility in Jackson and a 100-bed facility in Martin. West Tennessee Healthcare purchased the hospitals for an estimated $67 million.
The company has been under pressure since the HMA buy, including pressure on Smith to resign.
Last year, ASL Strategic Value Fund sent a letter to CHS' board of directors stating "it is time" to replace Smith. The letter, dated Aug. 8, argued that action is needed immediately as management’s "previous missteps have resulted in billions of dollars of shareholder losses."
But CHS is not the only hospital chain seeking to pare its debt, as the industry faces competing pressures of lower reimbursement and declining admissions.
Tenet Healthcare, which currently owns 69 hospitals, last year identified $1 billion for divestitures in non-core markets and is already in the process of selling its revenue cycle arm Conifer.