Private equity-owned hospital chain files for bankruptcy

https://www.beckershospitalreview.com/finance/private-equity-owned-hospital-chain-files-for-bankruptcy.html

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New LifeCare Hospitals, a long-term acute care hospital operator based in Plano, Texas, filed for Chapter 11 bankruptcy protection May 6, according to The Wall Street Journal.

The company, owned mostly by affiliates of Blue Mountain Capital, Monarch Alternative Capital and Twin Haven Special Opportunities Fund, cited declining reimbursement due to Medicare changes as the reason for the bankruptcy filing.

Prior to entering bankruptcy, New LifeCare, which operates 17 facilities in nine states, closed some hospitals and took other steps to cut costs.

New LifeCare is in discussions with potential buyers, and CEO James Murray expects the company to be auctioned through the bankruptcy process later this year, according to The Wall Street Journal, which cited bankruptcy court documents.

 

 

 

Hedge fund manager predicts CHS will go bankrupt

https://www.beckershospitalreview.com/finance/hedge-fund-manager-predicts-chs-will-go-bankrupt.html

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Firefly Value Partners Co-Founder and Portfolio Manager Ryan Heslop is bearish on Franklin, Tenn.-based Community Health Systems, according to Reuters.

Mr. Heslop, who was one of several hedge fund managers to present May 6 at the Ira Sohn Investment Conference in New York, announced a short position in CHS during the conference.

He said CHS will likely go bankrupt over the next few years due to rising debt costs and dwindling revenue per hospital bed. 

The company’s “pile of debt and the declining profitability of hospitals make it almost certain that this patient will die,” Mr. Heslop said, according to Reuters.

CHS didn’t immediately respond to Reuters’ request for comment.

During the conference, other discussions about for-profit hospital operators were positive. Glenview Capital Management Founder and CEO Larry Robbins said he’s bullish on hospitals overall, and owning stock in Nashville, Tenn.-based HCA Healthcare, King of Prussia-based Universal Health Services and Dallas-based Tenet Healthcare is a wise decision, according to Barron’s.

 

 

Ex-hospital exec sues DMC for wrongful discharge, retaliation

https://www.detroitnews.com/story/news/local/michigan/2019/04/01/hospital-exec-sues-dmc-wrongful-discharge-retaliation/3337429002/?utm_source=Sailthru&utm_medium=email&utm_campaign=Issue:%202019-04-03%20Healthcare%20Dive%20%5Bissue:20208%5D&utm_term=Healthcare%20Dive

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The former top Detroit Medical Center cardiologist is suing the health system, arguing he was forced out of his job for complaining about alleged fraud at the health system, including unnecessary surgeries billed to Medicare and Medicaid. 

The wrongful discharge and retaliation lawsuit was filed in Detroit U.S. District Court by Dr. Ted Schreiber, who was recruited by the DMC in 2004 and developed a trademarked process to speed life-saving treatment for heart attack patients.  He also was the founding president of the new DMC Heart Hospital that opened with fanfare in 2014.

Schreiber’s accusations are “unsubstantiated,” a DMC spokeswoman said Monday night, and the health system continues to have a “culture of integrity.”

Heart Hospital shares facilities with Harper University Hospital that is poised to be terminated from the federal Medicare program in less than two weeks after failing inspections in October and December. Since Harper and Heart Hospital are considered a single facility by the Centers for Medicare Medicaid Services, both would be barred from the federal health insurance program for the elderly and disabled if Harper fails to pass an unannounced inspection by the April 15 deadline.

Michigan prohibits hospitals barred from receiving Medicare funding from participating in Medicaid, the health insurance program for mostly low-income people that is jointly funded by the state and federal governments. The two programs combined pay for 85 percent of Harper’s inpatient hospital stays, according to Allan Baumgarten, a Minneapolis-based hospital analyst.

The inspections in October and December were prompted by complaints from Schreiber and three other health system cardiologists who said they were forced from their leadership roles in retaliation for complaining about quality of care issues at the DMC. 

Cardiologists Dr. Mahir Elder and Dr. Amir Kaki filed a similar lawsuit last week in Detroit federal court, saying they were forced from leadership posts for complaining to leaders of the DMC about unnecessary surgeries, dirty surgical instruments and other problems. 

In his lawsuit, Schreiber said he brought concerns about physician competency and unnecessary and/or dangerous procedures to DMC peer review meetings in a bid to ensure that they were investigated. But his concerns were ignored by DMC and its for-profit owner, Tenet Healthcare of Dallas, according to Schreiber’s lawsuit.

“(T)he profitability of physicians was being weighed more heavily by DMC and Tenet executives than the physicians’ ability to provide services to patients within the standard of care,” Schreiber alledged in his lawsuit. “This policy resulted in an increase in unnecessary and/or risky procedures conducted by some physicians leading to bad patient outcomes and even patient deaths.”

The DMC continues to argue that Schreiber and the other cardiologists violated the company’s conduct code. The health system’s top priority is delivering “safe, high quality care to the people of Detroit,” said spokeswoman Tonita Cheatham.

“We have a culture of integrity, which means we don’t look the other way, we don’t condone inappropriate behavior of any kind, and we don’t compromise on our priorities,” Cheatham said in a statement.

“That also means we expect physicians to uphold our Standards of Conduct, including treating fellow physicians, nurses and staff members with respect and dignity.  We welcome the opportunity to present the facts underlying the claims made in the complaint.”

In the lawsuit, Schreiber indicated he also complained to Tenet and DMC leaders that some cardiologists were away from the hospital during times they were required to be on-site as members of Cardio Team One’s 24-hour on-call team. He also said he raised concerns about staffing cuts that resulted in poor nursing care for cardiac patients. 

Tenet Healthcare signed a three-year “corporate integrity agreement” as part of a $513 million settlement with the U.S. Department of Justice over allegations of a kick-back scheme involving involving four Tenet hospital subsidiaries in the South, according to Schreiber’s suit. The agreement required Tenet and all of its hospitals to self-report all complaints to the federal Justice Department.

“Senior management, including these Defendants, failed to do so and blatantly allowed legal violations to occur in order to generate more income by cutting medically necessary support and allowing unnecessary medical procedures, among other things,” the former cardiologist executive said in his lawsuit.

Schreiber referred a request for comment on the lawsuit to his attorney, David Ottenwess of Detroit.

“Tenet Healthcare, the current for-profit owner of the DMC, has been continually cited by the federal government for placing profits over people,” Ottenwess said. “Tenet has continued that course with its retaliation against Dr. Schreiber and others at the Heart Hospital who had the courage to question Tenet’s practices of profits over safety.”

 

CEO of Hahnemann, St. Christopher’s hospitals ousted

https://www.beckershospitalreview.com/hospital-executive-moves/ceo-of-hahnemann-st-christopher-s-hospitals-ousted.html

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Suzanne Richards, CEO of Hahnemann University Hospital in Center City, Pa., and St. Christopher’s Hospital for Children in Philadelphia, is no longer employed at the organizations, according to The Inquirer.

A spokesperson for Paladin Healthcare, the owner of the two hospitals, confirmed to The Inquirer March 7 that Ms. Richards was dismissed. The spokesperson did not comment on the reason for her dismissal.

Ms. Richards assumed the role two months ago, after several years of experience at hospitals in Southern California.

In 2018, Paladin created an affiliate, El Segundo, Calif.-based American Academic Health System, to buy the two hospitals as well as their related operations from Dallas-based Tenet Healthcare. American Academic Health System replaced several top executives at Hahnemann University Hospital after its purchase.

 

 

 

Tenet’s patient volumes face sustained pressure

https://www.healthcaredive.com/news/tenets-patient-volumes-face-sustained-pressure/549171/

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Dive Brief:

  • Tenet Health reported Monday patient volumes continue to slide for both inpatient and outpatient units for the fourth quarter and full-year. Looking at volumes on a same facility basis, which accounts for the sale of facilities, total admissions declined nearly 3% in the fourth quarter compared to 2017 and fell nearly 2% in 2018 compared to 2017. Still, the hospital operator beat analyst expectations for its fourth quarter revenue and earnings per share.
  • Hospital segment fourth quarter revenue fell nearly 8% to $3.8 billion from 2017 due to hospital sales last year and the California Provider Fee program. The ambulatory segment reported a modest increase in revenue to $554 million. And client losses in the Conifer RCM segment, which Tenet is looking to sell, caused revenue to dip nearly 6% compared with the fourth quarter in 2017.
  • Overall, for the full year, revenue declined nearly 5% from 2017, while net income improved to $111 million compared to a net loss of $704 million in 2017

Dive Insight:

Hospitals throughout the country continue to face a number of headwinds affecting patient volumes, particularly inpatient admissions. But Tenet reported volume declines for nearly every patient measure, including outpatient visits. 

Tenet’s competitor CHS also reported a drop in total admissions for the year, although CHS’ was much steeper.

While analysts with Jefferies said the softening of patient volumes for Tenet was of concern, the company also delivered strong payer-mix growth and increased hospital profit margins, which underscores “(management’s) progress in delivering cost efficiencies,” the investment bank’s analysts wrote in a note.

CEO Ronald Rittenmeyer told investors Tuesday the company is entering 2019 with a renewed sense of urgency around volume growth. Tenet’s chief operating officer will be tasked with improving organic growth at the system’s hospitals, he said.

Rittenmeyer also outlined the priorities for 2019, which include expanding its ambulatory business, adding new physicians and improving operations to win over patient loyalty. He added the company will look to develop its brand image by delivering the “same unified message” in advertising in its markets around the country.

Tenet disclosed it may have found a buyer or partner for its Conifer business, though executives could not offer any specifics. “We have recently entered into exclusivity with one of the parties that has been engaging with us. While there can be no assurance that this negotiation will result in a transaction we are very pleased with this progress,” Rittenmeyer said.

Tenet also released its guidance for 2019. It expects to generate revenue between $18 billion and $18.4 billion while its window for net income is expected to be between $15 million and $115 million.

Rittenmeyer called 2018 “a year of significant change for the company,” and pledged “additional progress in each of our business segments in 2019 in line with our plan to deliver long-term sustainable growth.”

 

 

 

Troubled Tennessee Hospital Chain Says It’s On The Way Out Of Rural Areas

https://www.nashvillepublicradio.org/post/troubled-tennessee-hospital-chain-says-it-s-way-out-rural-areas#stream/0

Community Health Systems now owns 118 hospitals in 20 states while divesting facilities in small towns, where hospitals of all kinds have struggled in recent years.

Community Health Systems now owns 118 hospitals in 20 states while divesting facilities in small towns, where hospitals of all kinds have struggled in recent years.

The selling spree is primarily meant to pay down the company’s outsized debt load left over from when Community Health was growing as fast as it could. But the hospital chain was also strategically pulling out of small towns, including several in Tennessee.

CEO Wayne Smith told investors gathered at this week’s annual J.P. Morgan Healthcare Conference in San Francisco that it’s almost entirely left communities with fewer than 50,000 people — once its calling card compared to competing hospital chains.

“So our markets look a lot more like HCA and Universal and Tenet than they did in the past,” Smith said late Wednesday during a company presentation. “We’re no longer a non-urban, or for some of you all a rural, hospital company.”

As it’s repositioned, Community Health’s stock price tumbled to nearly two dollars a share, stoking concern of whether the company could even recover.

The hospital chain has continued to see shrinking admissions and ER visits, but executives assured investors this week they’ve regained their footing.

“Those divestitures have helped us in terms of paying down our debt, improving our margins, improving our cash flow, which you will see more of in 2019,” Smith said.

 

 

 

MARKETS TAKE BIGGEST HIT SINCE FEBRUARY, HEALTH STOCKS SLIDE

https://www.healthleadersmedia.com/finance/markets-take-biggest-hit-february-health-stocks-slide

Healthcare stocks were not immune from Wall Street’s worst day since the period of high volatility earlier this year.

Stocks fell across the board on Wednesday, as Wall Street suffered its worst trading day in more than eight months.

In response to heightened concerns over the Federal Reserve’s recent decision to increase interest rates and rising Treasury bond yields, stocks plunged in all three major trading markets. The Dow Jones Industrial Average fell sharply by 832 points, the S&P 500 dropped by 3.3%, and the Nasdaq slid by more than 4%.

Healthcare stocks suffered in the general market slide, with the Dow Jones U.S. Health Care Index down by 2.46% at the end of trading.

However, among the ‘Big 5’ insurers, Aetna’s slide of 0.15% was the smallest drop. The Hartford, Connecticut-based insurer was boosted by receiving approval Wednesday morning from the Department of Justice on its $69 billion merger with CVS. For its part, the retail pharmacy giant finished the day down 0.72%.

Here’s how the four other major health plans fared:

  • Cigna Corp. finished down 1.9%
  • UnitedHealth Group fell by 2.58%
  • Anthem Inc. ended down 2.34%
  • Humana Inc. fell by 1.82%

Below are how several other healthcare companies finished during Wall Street’s downturn on Wednesday:

  • Tenet Healthcare dropped by 8.43%
  • Centene Corp. dipped by 0.74%
  • Express Scripts Holding Co. fell by 1.69%
  • Teladoc, Inc. dropped by 8.42%
  • Community Health Systems finished down 6.35%
  • HCA Healthcare Inc. slipped by 3.19%
  • Molina Healthcare dropped by 3.52%
  • Magellan Health Inc. fell slightly by 0.61%
  • Athenahealth, Inc. dipped by 2.81%
  • Quorum Health Corp. fell by 6.89%
  • WellCare finished down 2.08%
  • LifePoint dropped slightly by 0.36%
  • Universal Health Services, Inc. slid by 1.36%