First-quarter net losses swelled to $98.5 million, more than tripling the $27.2 million loss reported a year earlier.
Quorum Health has sold or closed 10 hospitals since it spun off from Community Health Systems, with 38 hospitals, two years ago.
That spree of divestitures is primarily to blame for a dramatic drop in net operating revenues, the company said Wednesday in announcing its quarterly financial performance. Quorum's net losses tripled to $98.5 million in the first quarter ended March 31 from $27.2 million a year earlier.
Quorum, based in Brentwood, Tennessee, has collected $84.8 million in net proceeds from its divestitures, and it plans to collect another $165-215 million in divestiture proceeds by the end of next year, having already signed letters of intent to divest seven more facilities, the company said.
But the costs associated with getting rid of hospitals can add up. Quorum has incurred tens of millions of dollars in expenses associated with these divestitures, as the company noted in a filing with the Securities and Exchange Commission on Thursday.
- Closing costs: Shutting down Affinity Medical Center in Massillon, Ohio, in February has already cost Quorum $13.7 million, including $7.4 million in severance pay and salary continuation costs, the company said. Before the end of 2018, the closure is expected to cost another $2.5-3.5 million to complete wind-down processes and asset transfers to the city.
- Health records maintenance: Quorum noted that it's obligated to maintain Affinity health records for about 19 years at an estimated cost of $300,000 per year.
- Other divestitures: In a separate SEC filing, Quorum listed two other Q1 divestitures. The company sold its 77-bed Clearview Regional Medical Center and affiliated facilities in Monroe, Georgia, on March 31 for $37.4 million. The company sold its 70-bed Vista Medical Center West and affiliated facilities in Waukegan, Illinois, for $1.2 million on March 1.
- Ongoing CHS dispute: In addition to its hospital-selling spree, Quorum is also dealing with a dispute over transition services agreements it signed with CHS as part of the spin-off arrangements in April 2016. The agreements involved Quorum paying CHS for certain services, including accounts receivable collections, information technology, and payroll processing. The dispute, which Quorum says involves a disputed bill of about $10.6 million, is pending in arbitration, with hearings scheduled June 18-29.
- Why the CHS dispute matters: "Terminating or transitioning the services provided by the transition services agreements with CHS could result in additional costs and a risk of operational problems, delays in collections from payors, potential errors and possible control issues during the termination and transition processes, any of which could adversely affect our business, results of operations, financial condition and cash flows," Quorum said.
Amid this turmoil, Quorum President and CEO Thomas D. Miller made 34% less last year than he did in 2016.
Steven Porter is an associate content manager and Strategy editor for HealthLeaders, a Simplify Compliance brand.