Tag Archives: Debt Reduction Strategies

CHS in negotiations to extend nearly $2B in debt

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https://www.beckershospitalreview.com/finance/chs-in-negotiations-to-extend-nearly-2b-in-debt.html

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Franklin, Tenn.-based Community Health Systems is in talks with a group of bondholders led by Franklin Resources, an asset management company, to extend approximately $2 billion in bonds due in 2019, people familiar with the matter told the Wall Street Journal.

The company is in talks to swap the 2019 unsecured notes for debt secured by its assets, one person familiar with the matter told WSJ. This type of transaction would be difficult for CHS to complete, as the company can only issue about $1 billion in new secured debt without permission from its lenders to waive a covenant in its revolver loans.

Extending the debt due in 2019 is only a short-term solution because CHS faces billions of dollars in debt maturities from 2020 to 2023, according to the report.

CHS put a financial turnaround plan into place last year, which included selling 30 hospitals to reduce its heavy debt load. The company completed the divestiture plan earlier this month. With the help of proceeds from the hospital sales, CHS brought down its long-term debt load to $13.9 billion in the third quarter of this year, from $14.8 billion in the same period of 2016.

CHS ended the most recent quarter with a net loss of $110 million on revenues of $3.67 billion. That’s compared to the third quarter of 2016, when the company posted a net loss of $79 million on revenues of $4.38 billion.

 

Tenet Healthcare to slash 1,300 positions to cut $150M in expenses

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http://www.fiercehealthcare.com/finance/tenet-healthcare-to-slash-1-300-positions-to-cut-150-million-expenses?mkt_tok=eyJpIjoiT0dRd016STJNVEE1WWpsaiIsInQiOiJqaWRyYjdBcThaN0VWT1JkdFd6TkdvVXEwcUdiZGFHUmRuT2pISG9aVWtlVTByT2diZXdVOThvRnE5b3pQNXlVNDRNdTBtY2NaOW85Y1ErOXpERDRydUNaZHBQT29idXA2RngwYVdhaEtcLzB1TE5MR3VrTFh5VW8zR2xRRElHcmgifQ%3D%3D&mrkid=959610&utm_medium=nl&utm_source=internal

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Tenet Healthcare, which recently went through a management shakeup amid financial losses, plans to eliminate 1,300 positions in order to cut expenses by $150 million.

The Dallas-based healthcare system announced Friday it had begun an “enterprise-wide cost-reduction imitative that would primarily involve job cuts and renegotiation of contracts with suppliers and vendors.”

The majority of the savings will be through actions within the company’s hospital operations, including eliminating regional managers and streamlining overhead and centralized support functions. Job cuts will also take place within the company’s ambulatory care and Conifer business segments.

In total, the company intends to eliminate 1,300 positions or about 1% of its workforce, including contractors, by the end of 2018.

The announcement comes in the wake of the sudden departure of longtime CEO Trevor Fetter, who last week stepped down from the top post and left earlier than planned with a severance package worth nearly $23 million. Reuters also reports that the organization has scrapped its sale plans and is continuing to explore ways to reduce its $15 billion debt.

The news about the layoffs also included the company’s preliminary financial results for the third quarter of 2017. Tenet expects a net loss of $366 million in the third quarter.

Ronald A. Rittenmeyer, who was recently appointed CEO while the organization searches for Fetter’s permanent replacement, said in the announcement that the organization is moving quickly to improve the financials and return for shareholders. The cost-reduction plans include structural changes in the way the organization operates to improve agility and speed decision-making, he said.

“We believe these changes will help us drive organic growth, expand margins, and better support our hospitals and other facilities in delivering higher levels of quality and patient satisfaction,” he said.

9 ways hospitals can reduce debt

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http://www.healthcaredive.com/news/9-ways-hospitals-can-reduce-debt/430488/

Healthcare reform has had a dramatic impact on hospital reimbursement. While millions of Americans are now insured under the Affordable Care Act, high-deductible health plans can leave patients cash-strapped after expensive episodes of care. Sometimes, patients can’t pay for the services they receive, pushing up bad debt at hospitals. At the same time, hospitals are dealing with lower reimbursements and a shift from inpatient to outpatient care, leaving some with property and beds that are no longer financially productive.

Take Community Health Systems for example. Burdened with $15 billion in debt , the Franklin, TN-based hospital chain sold a four-hospital joint venture and spun off 38 hospitals into a separate entity, Quorum Health Corp., earlier this year. Recently, the system inked deals to sell an additional 17 hospitals.

According to Patrick Pilch, head of BDO Consulting’s healthcare advisory practice, many hospitals and health systems don’t have a complete handle on what their costs of care are and they’re losing money as a result. “Understanding your costs of care as well as your cost of capital is imperative,” he tells Healthcare Dive. “Then align that to a future strategy. That’s where you’re going to pull your way out of debt.”

Hospitals should look at their assets, business plan, market and supply chain and then see how those align with their capital strategy, Pilch says. With interest rates expected to rise, non-investment grade hospitals will have a harder time getting capital. “If you have a lot of capital that’s not performing well, you’re in a bit of a state right now,” he adds.

Here are nine ways hospitals can work on debt: