The Community Health Systems (CHS) is one of the largest healthcare group in the United States with over 135 hospitals in 29 states and in England [1], with approximately 20,000 beds [2]. CHS serves more than 55% of the market with most affiliated hospitals being the only healthcare provider. While closing the accounts on 31st December 2012, the company had under its belt 162 hospitals out of which there were 156 general, acute care hospitals, 5 psychiatric hospitals and one rehabilitation center with 41,198 beds. CHS also operates 112 surgical centers Most of the centers provides high end services with well trained medical staff [3].
Community Health Systems started in 1985 and in the short period of 35 years has grown to become one of the largest healthcare group in the States. The company went public in June 2000 at $13 a share. The companies biggest growth phase occurred in 2007 when they acquired Triad Group of Hospitals, which gave the strength of additional 50 hospitals to Community Health Systems name. The fortune 500 had ranked community health systems as #198 in 2012 [4] and #184 in 2013 only second to HCA in the healthcare providers industry [5]. The Community Health Systems has 90,000 staff with a management experience of over 23 years each. The CHS business strategy is very simple but Industry analysts often say that it is effective.
The revenue of the healthcare industry unlike any other depends on the inpatient occupancy or ALOS(average length of stay), the volume of outpatient visits and procedures, the services ordered for the inpatients and outpatient. For CHS the majority of its revenue comes from Managed care and other insurers ( apart from govt. insurance) with 54.5%, after which comes the government insurance providers such as Medicaid and Medicare. International insurance providers contributed to 3.2% of the total revenue. This is important for a hospital since the profit margins for Medicare and Medicaid are lesser when compared to the other insurers. The industry average for Medicaid and Medicare is 49% [6] while Community Health Systems constitute only a 43.06% of the revenue.
Trends and Threats In Healthcare Industry
Affordable Care Act - or the Obamacare as we know it ensures Insurance for all. The general public sees it as a means to reduce the increasing high prices, but as a hospital this means the reduction of accounts receivables and a huge reduction in doubtful accounts which amounts to 3770 million USD for CHS. Everyone being insured also implies that even a great depression cannot affect the healthcare industry.
Mergers and Acquisitions - Though the government has tried to reduce the mergers and acquisitions through the certificate of need (CON) act (see appendix 3) and other such acts, it still remains that for hospitals to gain leverage with businesses and other insurance providers, smaller healthcare providers are looking for mergers or acquisitions. The business strategy of CHS includes...
