Community Health Systems Chief Talks HMA Merger
Cutting costs. Smith said there is about $100 million in overhead reduction to be made, including supply management. Expect CHS to eliminate some of HMA's outsourcing. Smith mentioned that CHS has an internal collection agency that brought in $250 million in 2012 at an effective rate of about half of external vendor rates. Its eligibility screening service is also internal and does the job for about one-third of outsourcing costs, according to Smith.
IT expenditures. HMA's IT system will need some investment. Smith said that the development side of HMA's IT "has very good potential" while the operating system "needs work." CHS has "factored in some extra costs that are likely to be spent over the couple of years."
Possible divestitures. When asked about anticipated divestitures from the deal or to comment on markets where there might be concerns about market share, Smith declined to comment extensively saying simply that it was "too early to talk about that."
Margaret Dick Tocknell is a reporter/editor with HealthLeaders Media.
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