Former senior executive at Community Health Systems Inc
- Community Health Systems’ (NYSE: CYH) recent financial performance and strategy to return to stabilisation
- Labour pressures faced by Community Health Systems and expected timeline for the labour force normalising
- Patient volume trends within the acute care sector
- Competitive positioning vs Tenet Heathcare and others
- Next steps for Community Health Systems
What 2-3 key trends or drivers should we monitor when looking at CHS [Community Health Systems] and the general acute care hospital sector?
How long do you think it will take CHS to stabilise its staffing problems? CEO Tim Hingtgen said it may take a bit longer than expected to moderate labour pressures. How have recent wage inflation and highlabour-cost pressures impacted CHS’s labour space? The company spent about USD 70m in Q1 2021 and USD 190m in Q1 2022 on labour.
You said CHS’s rural location has made it harder for CHS to recruit staff. What is the company undertaking to contend with staffing shortages in such a rural footprint? Is CHS coming up with innovative initiatives to retain and recruit caregivers?
Could you discuss demand for contract labour in the market?
Could you speak to the general trend of healthcare moving towards more outpatient settings and the downward pressures on reimbursement?
How effectively has CHS dealt with the uptake of ASCs [ambulatory surgery centres] and the threat of small niche hospitals?
What methods could CHS make use of to efficiently take ASCs under its belt?
CHS’s Q1 2022 performance hit a downward trend, where adjusted EBITDA fell by 17.4% YoY at the end of March 2022 to USD 400m, compared to USD 495m for the same period in 2021. Did the company predict this? What are your thoughts on its recent performance pertaining to the CARES [Coronavirus Aid, Relief and Economic Security] Act?
Could you provide a rough estimate of how much money CHS has remaining from the CARES Act? Do you think the company is just getting by off this amount, or is it robust enough to deal with this heavy pushback?
You mentioned Tenet Healthcare is also using CARES Act dollars to try and offset its losses. Where does this downturned physician community help in comparison to Tenet, and how would you assess CHS’s competitive positioning vs other big players such as HCA Healthcare and Universal Health Services?
CHS is very highly levered currently with a debt-EBITDA ratio of approximately USD 5.7 billion, with USD 12bn in debt and USD 460m in cash. What is your assessment of the company’s leveraging profile? CHS mentioned it has had over 2x reduction in total leverage since January 2022. Do you think this is accurate and how might it fare?
What additional levers could CHS pull in the near future, including deleveraging some of its hospitals and expansion in the ASC space?
You said CHS’s rurality is a big issue. What efforts has the company put in place to try and expand into major cities, including transfer centre placement?
Could you expand on CHS’s US geographical footprint?
CHS’s high leverage prevents it from putting capital where it needs to increase its ability to conduct procedural volumes. Where else is best for the company to deploy its remaining capital?
Elective surgeries and procedures are the bread and butter and where the margins are for hospitals currently, but many had to be cancelled due to the pandemic, thus losing revenue. What do you think is the timeline for elective procedures reopening for CHS? When might the company reach a fully normalised level, if at all?
Could you expand on the uptick of elective surgeries and how successful CHS has been post-pandemic regarding elective surgeries?
How do you see ORs [occupancy rates] trending over the next 1-5 years? They’ve increased 800 bps since 2016. What are the main drivers of this expansion, and what’s the flow-through to revenue per location?
Patients in rural areas tend to have fewer alternatives with treatments and have higher chances of being hit by hidden costs. With the No Surprises Act and reduced chances of surprise billing, has CHS faced the brunt of this? How material is this, and how much of a potential revenue loss could this be for CHS?
Is there a strong appetite from potential buyers in the market, such as LifePoint, Prospect or Prime, to acquire CHS? What would be the implications? Would it make sense?
Can you think of any low-hanging fruit to lower cost to protect margins? What does the turnaround time look like?
What is your take on CHS’s leadership and management team now we’ve spoken about overhead and management?
How is general inflation affecting CHS’s medical supplies and drivers? Could you speak to the supply chain issues and what these mean for the company going forward?
CHS’s management is targeting 4% top-line growth in 2022. Do you think this is a reasonable assumption? If so, what will be the main growth contributors? If not, how would you adjust that figure and what assumptions are you basing that on?
CHS revised its 2022 adjusted EBITDA guidance downward to the USD 1.7bn-1.9bn range, which makes sense given its recent issues. Do you think this is reasonable or ambitious?
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