Community Health Systems, Inc. (CHS) began in 1985 and operates acute care hospitals in non-urban markets, primarily in the Southeastern and Southwestern United States. It went private in a leveraged buyout in 1996 by Forstmann Little & Co., a New York private investment firm, which committed $500 million of capital for acquisition and expansion. The usual goal of a leveraged buyout by an investment firm is to change the management in order to significantly improve the company in whatever way is needed to make the company much more attractive to investors. Leveraged buyouts often, but not always, are later sold at a profit, usually by offering stock to the public again at a higher price. There are many successful buyouts where new management realized the full potential of a company limited by its previous management. TWA and many other bankrupties are examples of the worst that can befall leveraged buyouts.
Here are some excerpts from the first half-page advertisement of "a three-part series" in the NCT by CHS:
Our goal is to increase the local use of our hometown hospitals by adding or expanding services, purchasing high-tech equipment and recruiting physicians, when needed.
The hospital will be run locally and the community will have significant influence. The hospital board of directors [will be] 100% local, which will have credentialing authority and management of quality control.
The hospital [will] continue to provide indigent care.
CHS is interested in addressing community concerns. If you have additional questions, please contact Ken Hawkins at 615-373-9600.
Here is selected information from some of the webpages that give information about CHS. Please note that making a profit is a good thing, since it shows you are providing a service that others find useful and that you are running your business well. If you consistently don't make a profit, you usually go out of business. Hence these following financial statements should definitely not be used as an argument against the lease of the Fallbrook Hospital to Community!
From Forbes 500 Top Private Companies:
Founded in 1985, Community Health Systems, Inc. is a leading operator of acute care hospitals in non-urban markets, primarily in the Southeastern and Southwestern United States. Community's hospitals offer a broad range of inpatient medical and surgical services, outpatient treatment and skilled nursing care. The company's strategy is to capture incremental market share by adding services in response to local demand and thereby slowing the outmigration to urban medical centers. The company was purchased in 1996 by Forstmann Little & Co., a New York private investment firm, which committed $500 million of capital for acquisition and expansion.
From the Federation of American Health Systems, which includes both Community Health Systems (39 Hospitals) and Columbia/HCA Healthcare Corporation (340 Hospitals) among its "nearly 1,700 owned and managed hospitals and health systems that offer traditional acute care, ambulatory care, psychiatric and rehabilitative care; and, allied companies involved in health insurance and health care systems.":
As a leading operator of acute care hospitals in non-urban communities, Community Health Systems' hospitals offer a broad range of inpatient medical and surgical services, outpatient treatment, and skilled nursing care. The company currently owns, leases, or manages 38 hospitals with 3,535 beds in 14 states. These hospitals serve as the nucleus for health care delivery in their communities by offering easy access to a full range of medical services, excellent care, and competitive pricing. The company's strategy is to capture incremental market share by adding services in response to local demand and thereby slowing the out-migration to urban medical centers.
CHS has been successfully built on the belief that community hospitals are not only needed, they also need to be successfully managed. Community Health Systems will celebrate its twelve year anniversary in March of 1997.
As of 1996, before the leveraged buyout, here are the financials as reported by Market Guide Inc. and Hoover's Company Capsule:
|Market Capitalization||$230 million|
|Revenues 1996||$566 million|
|Revenues January-March 1996||$155 million|
|Net Income January-March 1996||$12.7 million|
|Return on Assets||3.97%|
|Return on Equity||9.49%|
I thank Rebecca Indest for finding and sending me the URL for Community Health Systems, Inc. in 1998.
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Copyright © 1997-2000 by Tom Chester.
Permission is freely granted to reproduce any or all of this page as long as credit is given to me at this source:
Comments and feedback: Tom Chester
Last update: 28 December 2000.