Community Health Systems announced on Monday, August 3,2015 plans to spin out 38 hospitals and its hospital management and consulting business, Quorum Health Resources, to form a new company, Quorum. Based in Franklin, CHS is the largest hospital company by the numbers and with this announcement, Nashville will get another publicly traded health care company.
In an era of highly active health care deal flow, CHS (NYSE: CYH) has been one of the area’s most active companies, adding more than 70 hospitals last year with a $7.6-billion acquisition of Florida-based Health Management Associates. Since closing that deal, the system has added and subtracted some facilities in primarily one-off moves, and also announced plans to substantially up its investment in Middle Tennessee with a $66 million satellite office in Antioch.
“This significant transaction will realign our portfolio into two strong and focused companies that can respond to market demands with greater agility and that are better positioned to take advantage of growth opportunities, while creating additional value for our stockholders,” Wayne Smith, chairman and CEO of Community Health Systems, said in a news release announcing the deal. “Over the past 30 years, Community Health Systems has evolved from a collection of smaller hospitals into a much more complex and diversified portfolio of hospitals, outpatient services and health care systems across the country. We know how important hospitals are to their communities and recognize that smaller facilities have distinct opportunities and different challenges than those in larger markets, where the majority of our assets are located.”
The hospitals spinning out into Quorum “have strong market positions,” according to a news release, and are primarily located in cities with populations of fewer than 50,000 people. More than 80 percent of the hospitals are the only acute care provider in their market, the release says. CHS’ primary markets are generally mid-size cities and suburban areas, landing between those of Nashville-based HCA Holdings, which focuses on dense, large urban areas, and Brentwood-based LifePoint Health, which operates in more rural communities.
The spinout should be completed in the first quarter of next year, according to news release. Following the deal, CHS will operate 160 hospitals in 22 states, returning the title of nation’s largest hospital operator to Nashville’s original hospital giant, HCA Holdings, which operates 165 in 20 states and England.
Read more about this in the Nashville Business Journal here.
