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Analysis

Arbitration Ends CHS-Quorum Spin-off Dispute

By Steven Porter  
   January 10, 2019

The panel directed CHS to give about $2.1 million back to Quorum, but it also rejected the basis for Quorum's withholding of about $1.5 million in payments to CHS.

Quorum Health Corporation said this week that arbitration over a multimillion dispute stemming from its 2016 spin-off from Community Health Systems has concluded with a final ruling.

While the ruling doesn't require Quorum to pay about $9.3 million in contested payments being withheld from CHS, it does require Quorum to pay about $1.5 million, according to a statement released Monday by Quorum.

Meanwhile, CHS will be required to return about $2.1 million in disputed payments to Quorum, according to the statement.

The long-running feud centers on two transition agreements signed when CHS spun off 38 hospitals to form Quorum as a separate company. The agreements outlined services CHS would provide to Quorum for five years, including information technology, payroll, billing, collections, and more.

When the spin-off severely underperformed predictions, investors began asking questions. Quorum formally responded in a letter acknowledging several reasons to question the "operational competence" of the CHS leadership.

Steven Porter is an associate content manager and Strategy editor for HealthLeaders, a Simplify Compliance brand.


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