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Why CHS is converting two hospitals from inpatient to outpatient

Nashville Buisiness Journal, 5/2/14

Community Health Systems is converting a Pennsylvania hospital to a walk-in clinic, the second such announcement in a week for the Franklin-based company.

Mid-Valley Hospital, in Peckville, Penn., will stop offering inpatient and emergency department services in July, according to a report from the Scranton Times-Tribune. Earlier this week, The Tennessean reported that Haywood Park Community Hospital in Brownsville would also end inpatient emergency services effective July 31.

In both cases, CHS officials cited lagging inpatient admissions along with shifts in reimbursement mechanisms as the motivation for the transition, according to media reports.

CHS CFO Larry Cash also told The Tennessean that a lack of Medicaid expansion in Tennessee contributed to the Brownsville hospital closure. Pennsylvania has chosen not to expand Medicaid, though the state is considering doing so depending on the fate of a proposed work requirement.

While CHS is certainly growing in the hospital space — the Franklin system recently acquired 71 hospitals through its Health Management Associates buyout, has made two one-off hospital purchases this year, and now has its sights set on a Mississippi hospital— shifting care to outpatient settings is a growing trend for both the health care industry as a whole and the company.

In March, CHS CEO Wayne Smith told the Nashville Business Journal that outpatient treatment now makes up about 53 percent of CHS’ net revenue, up from an even 50/50 split with inpatient a few years ago.

“Generaly speaking, a lot of procedures are moving to outpatient,” Smith said during an interview for last week’s cover story. “Technology is driving that, the payment system is driving that in terms of insurers trying to encourage people to do more things on an outpatient basis. I think that will continue so we will adjust to that as time goes on.”

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