Understandably, organizations of all stripes across healthcare had to put plenty of goals on hold during the COVID-19 pandemic.
But amid the crush of the fast-evolving challenges of the pandemic and waning demand for elective business, Community Health Systems officials said they were able to stay on track with multiple ongoing projects in the midst of responding to the pandemic.
That has included making "targeted investments in markets where we see the most potential to drive long-term growth," said CEO Wayne Smith said during the company's third-quarter earnings call on Wednesday. "We are now finishing that work with the divestitures completed in the third quarter and an expectation that we will complete the rest of our pending divestitures before the end of the year, we will end our formal portfolio optimization strategy. We're pleased with our remaining markets and confident that we can effectively produce value with this portfolio."
His comments came a day after CHS announced Smith would step down from the role at the end of the year. The company plans to appoint Tim L. Hingtgen, 53, who serves as president and chief operating officer of the company, to assume the role of CEO on Jan. 1, officials said. Hingtgen has served as COO at the Franklin, Tennessee-based health system giant since September 2016, overseeing the company's strategic and operational priorities.
Smith will transition to the role of executive chairman of the company’s Board of Directors while Hingtgen will continue to serve as a member of the board.
The health system's "singular focus" has been on market development and long-term growth, Smith said. "Community Health Systems accelerated investments in high return (capital expenditure) opportunities on both the inpatient and outpatient side of the business," he said.
Between 2018 and now, the health system has added more than 200 hospital beds, excluding replacement hospital projects, officials said. They are also looking to complete a number of additional projects including an 84-bed replacement facility in Indiana and an 18-bed "micro-hospital" in Arizona by the end of next quarter, with a larger full-service acute care hospital planned in Tuscon in 2022.
“We are very pleased with the strategic progress we’ve made this year, particularly during a year with so many unexpected and uncontrollable challenges,” Hingtgen said during the call.
CHS posted better than expected results in the third quarter.
The health system reported profits of $112 million, or 97 cents per diluted share, compared to a net loss of $17 million—or 15 cents per diluted share—the same time last year. It beat analysts' expectations on earnings per share by 29 cents, according to Seeking Alpha.
That was on operating revenues of $3.1 billion in the quarter ending Sept. 30, a 3.7% decrease compared with $3.3 billion for the same period in 2019. Still, the health system beat analysts' expectations on revenue by $220 million. The health system did not realize any pandemic relief funds from the CARES Act, or any other sources of relief during the quarter, officials said.
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Still, the pandemic has taken a hit on business, officials said.
While volumes for the current year have not returned to pre-pandemic levels, they have improved from their lows in March and April 2020, officials said. The results show a 13% decrease in admissions and an 18% decrease in adjusted admissions compared to the same period in 2019. The health system saw the drops in admissions reported by health systems around the country. On a same-store basis, admissions decreased 6.2% and adjusted admissions decreased 11.5%, compared with the same period in 2019.
On a same-store basis, net operating revenues increased 2.9% for the third quarter of 2020, compared with the same period in 2019 reflecting COVID-19 pandemic-induced changes in the mix of services provided and payer mix compared to the prior period.