- Quorum Health, the financially troubled hospital spin off of Community Health Systems, will sell Alabama-based 60-bed Cherokee Medical Center to NNZ Holdings.
- The deal is expected to close within 60 days of the announcement, pending regulatory approvals.
- This is Quorum's "third definitive agreement to divest non-core assets" and it is still engaging in "active discussions on further divestiture opportunities," according to President and CEO Thomas D. Miller.
Tennessee-based CHS, one of the largest for-profit hospital operators in the U.S., completed spinning off Quorum last year as it sought to tackle its massive debt of about $15 million. It has also been rapidly divesting dozens of hospitals since 2016, with the latest one also being in Alabama. The other two hospitals Quorum, which originally consisted of 38 hospitals has divested so far were in North Carolina and in Georgia.
CHS will divest more than 25 hospitals across the country this year, it announced in its Q4 2016 earnings report.
But while the spotlight had been on CHS since 2016, at least one other for-profit hospital operator is now facing significant financial troubles of its own. Last month, Texas-based Tenet Healthcare reported its net operating revenue dipped to $4.86 billion last year compared to $5.05 billion in 2015. It then announced a sell of six home healthcare facilities to Amedisys, Becker's Hospital Review reported.
Last year, CHS' net losses were "primarily related to impairment charges," which were "partially offset by the gain of $91 million on the sale of a majority ownership interest in the company’s home care division." Tenet, on the other hand, attributed its losses to a lack of demand for services.
Yet divestitures is not the only strategy hospitals and health systems can use to reduce their debt. “Understanding your costs of care as well as your cost of capital is imperative,” Patrick Pilch, head of BDO Consulting’s healthcare advisory practice, recently told Healthcare Dive. “Then align that to a future strategy," he added. "That’s where you’re going to pull your way out of debt."