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Analysis

CHS to Sell 4 Hospitals, Exit South Carolina

By John Commins  
   November 19, 2018

The for-profit hospital chain says it will sell its four remaining hospitals in the Palmetto State as part of its ongoing strategy to consolidate operations and reduce debt.

Debt-laden Community Health Systems, Inc. announced Monday that it will sell its four remaining South Carolina hospitals to the Medical University Hospital Authority in Charleston, S.C.

Financial terms were not disclosed for the deal, which includes clinical and outpatient services, and is expected to be finalized in the first quarter of 2019.

The acquisition will virtually double the number of hospital beds to more than 1,400 for MUSC.

"This transaction is the first time MUSC has acquired other hospitals," said MUSC board Chairman Charles W. Schulze in a media release.

"The additions will increase the size and scale of the MUSC Health network, and in today's environment, larger, more efficient health care systems can deliver greater value to patients and have a positive impact on population health," Schulze said.

In October,  CHS announced that it would sell its two-hospital Mary Black Health System to Spartanburg Regional Healthcare System in South Carolina in a deal that is expected to be finalized by year's end.

Franklin, Tennessee-based CHS has sold or announced the pending sale of 16 hospitals so far in 2018. The company has been struggling since its ill-advised $7.6 billion acquisition of Health Management Associates in 2013.

The four hospitals to be sold to MUSC are:

  • 82-bed Chester Regional Medical Center.
     
  • 225-bed Springs Memorial Hospital in Lancaster.
     
  • 396-bed Carolinas Hospital System in Florence.
     
  • 124-bed Carolinas Hospital System—Marion in Mullins.

The four hospitals were among the planned divestitures discussed during CHS's third quarter 2018 earnings call.

The four hospitals in 2017 combined delivered care through more than 129,000 emergency department visits, 159,000 outpatient visits, 18,800 hospital admissions, and 339,000 clinic visits with physicians, MUSC said in a media release.

In 2017, CHS sold 30 hospitals that CHS executives said were low performing. However, a recent report by Axios challenges that assertion.

Even with the divestitures, CHS remains one of the largest publicly traded hospital companies in the nation and owns, leases or operates more than 100 affiliated hospitals in 19 states.

MUSC includes a 700-bed medical center, a pediatric hospital, a cancer center, and a medical school. When the CHS deal is finalized, MUSC will employ more than 16,400 people across South Carolina.  

Roughly 60% of MUSC Health patient care revenues are generated outside of the tri-county area of Charleston, Berkeley, and Dorchester counties. 

John Commins is a senior editor at HealthLeaders.


KEY TAKEAWAYS

The four hospitals were among the planned divestitures discussed during CHS's third quarter 2018 earnings call.

MUSC says the four hospitals will give it the scale it needs to deliver more efficient care and improve population health.


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