Community Health Systems

Founding and early years (1985-2010)

E. Thomas Chaney, former executive of Hospital Affiliates, Inc. and David Steffy and Richard Ragsdale, former executives at Hospital Corporation of America spinoff Republic Health Corporation, formed Community Health Systems in 1985.^[6]

The company made its initial public offering in 1991. In 1996, the company was purchased by private equity firm Forstmann Little & Company.^[7] Community Health Systems went public again in 2000.^[8] In August 2003, the company acquires Southside Regional Medical Center.^[9] On October 10, 2015, the 372-bed Grandview Medical Center began operating in Birmingham, Alabama, replacing Trinity Medical Center.^[10]

In 2000, Community Health Systems paid $31 million to the United States Department of Justice to settle a review of its billing practices.^[11]

In 2007, Community Health Systems purchased Plano, Texas-based Triad Hospitals for $6.8 billion, adding nearly 50 hospitals, hospital management and consulting business Quorum Health Resources, and nearly doubling the size of the company. Among the facilities included in the deal was McKenzie-Willamette Hospital in Springfield, Oregon; Trinity Medical Center in Birmingham, Alabama; and the seven hospitals of Lutheran Health Network in the Ft. Wayne, Indiana region.^[12][13][14]

In 2010, McKenzie-Willamette's healthcare workers' union, SEIU, Local 49, claimed that workload increases, slashed benefits, and staff reductions had lowered the quality of both patient care and quality of life for employees.^[15] The union, in its "Profits Before Community" campaign against the hospital, continues to highlight that profits have tripled while charitable care and employee benefits have steadily decreased since the hospital moved from a non-profit to a for-profit enterprise under CHS.^[16]

Recent developments (2011-present)

In 2011, it was accused by Tenet Healthcare of overbilling Medicare in its aggressive admissions policy compared to its peers. It was subpoenaed by Medicare on its aggressive billing to the Medicare systems.^[17]

In 2013, Community Health Systems entered into an agreement with Health Management Associates to purchase HMA for about $3.6 billion in cash and stock.^[18] The merger was completed in January 2014 and made Community Health Systems the largest for-profit hospital operator at the time,^[19] with 206 hospitals in 29 states.^[20]

On August 4, 2014, Community Health Systems paid $95.14 million to the United States Department of Justice to resolve multiple lawsuits "alleging that the company knowingly billed government health care programs for inpatient services that should have been billed as outpatient or observation services."^[21] As part of the agreement, Community Health Systems was required to enter into a corporate integrity agreement that required the Company to participate in compliance efforts.

It was reported on August 18, 2014 that hackers broke into Community Health System's records system and stole data on 4.5 million patients. These data included names, Social Security numbers, physical addresses, birthdays and telephone numbers. CHS provided all patients whose records were impacted with free identity theft protection.^[22]

On February 2, 2015, Community Health Systems was required to pay $75 million to settle allegations "that they made illegal donations to county governments to reap more federal dollars under a now-discontinued matching program."^[23] The allegations were brought about by a former CHS employee in a complaint under the False Claims Act.^[24]

In October 2015, Community Health Systems paid $13 million to the United States Department of Justice to resolve allegations related to the False Claims Act.^[25]

On December 6, 2016 a former CFO of a CHS hospital was awarded $1.9 million in a whistleblower lawsuit he filed after he was terminated for refusing to submit false financial documents.^[26]

After CHS agreed in 2015 to sell Memorial Hospital of Salem County in New Jersey to Prime Healthcare Foundation,^[27] the sale was approved by New Jersey in early February 2017.^[28][29]

In January 2017, a settlement between investors and CHS executives for $60 million was reached. The settlement resolved allegations of "breach of fiduciary duty" by CHS executives.^[30]

In March 2017, Quorum's board retained outside counsel in relation to whether Community Health Systems had committed fraud with regards to financial projections for Quorum, and whether any of its current management was may have been involved in any possible fraud. In June 2017 Quorum said although the investigation did not produce "conclusive evidence" of fraud the projections appeared to be incompetent at best.^[31]

In April–July 2017, Community Health Systems rejected overtures from key Lutheran Health Network doctors to facilitate sale of its profitable network in CHS to a third party, after assertions of continual lack of re-investment into the network's facilities and staff by CHS management. After those discussions/accusations became public, several key leaders of the affiliated hospitals, Lutheran and Dupont, and the network were fired or resigned. Key prominent local community leaders Chuck Surack and Tom Kelley resigned from the Lutheran Health Network's and hospitals' advisory boards.^[32][33][34]

On March 13th, 2018 it was reported that the Company had hired financial advisory firm Lazard to help address long-term debt.^[35]