The president and CEO of Community Health Systems spoke today to the Vanderbilt University’s Health Care Business Alliance Conference about his company's strategies and the hospital market as a whole. Since Smith joined the company in 1997, it has posted a compounded annual growth rate of 28 percent and is on track for revenues of $12 billion in 2009. The company employs 85,000 people across the country and about 2,000 in the Nashville area. Here are some excerpts from this talk:
• On the benefit of CHS' national footprint: “We are spread out, We don’t have any one hospital or any one state where we have a disproportionate share of our revenue or earnings. The importance of that is risk and avoiding risk.”
• On why centralized administration works: Smith said CHS’ centralized services – for everything from facility management to billing, customer service and insurance programs – has helped it improve hospital operations and quickly implement new programs and technology.
It also helps bring acquired hospitals into the fold more quickly. In the past year, CHS has acquired three facilities with a combined 632 beds and $430 million in revenue. Having the systems in place to absorb those facilities has helped CHS hold its own after acquisitions. The company’s share of the markets where it operates stands at about 43 percent – $12 billion of the $28 billion in hospital revenue.
• On the M&A market: Moving forward, there will be a lot of opportunities for hospital acquisitions as many of the smaller, independent hospitals continue to struggle, Smith said. Prices are now at 40 percent to 60 percent of net revenue, as opposed to the 70 percent to 80 percent of net revenue of several years ago. (For more on this topic, check this coming Monday's City Paper.)
• On the prospect/cloud of health care reform: Regardless of what shape reform takes, Smith said the focus of health care will continue to be on patient care.
“I don’t care what the legislators do, they can’t screw this up that bad.”