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Community Health Systems falls short of 2018 hospital divestiture target

SAN FRANCISCO—Community Health Systems generated $400 million in gross proceeds on hospital divestitures in 2018, less than half of its $1.3 billion target, leaders from the hospital chain said Wednesday.

Thomas Aaron, the Franklin, Tenn.-based hospital chain’s CFO, confirmed before an audience at the J.P. Morgan Healthcare Conference on Wednesday afternoon that the company fell short of its 2018 goal by about $900 million. The hospital chain had repeated the goal on multiple occasions last year, including in its third quarter results.

CHS also missed its goal of divesting hospitals in 2018 that had accounted for $2 billion in combined revenue in 2017. The 13 hospitals CHS sold last year had $1.1 billion in combined 2017 revenue, Aaron said. That $2 billon goal was also cited in CHS’ third quarter results.

CHS’ leaders did not frame those results as having missed their 2018 goals, however.

“That target will continue into 2019 and we expect to complete that,” Aaron said.

It’s not clear whether CHS fell short because it didn’t get as much for the divested hospitals as it had planned, whether the company didn’t sell as many hospitals as it had planned to sell or a combination of both.

Aaron noted CHS has a definitive agreement on four hospitals in South Carolina it expects will close in the first quarter.

Wayne Smith, CHS’ CEO, said during the company’s question and answer session that it will be good to get past the divestitures.

“They obviously are a little bit of a distraction,” he said. “It takes a lot of resources to do this.”

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