Earlier this month, executives, founders and VCs took over San Francisco for the J.P. Morgan Healthcare Conference. While they touted their companies’ capabilities, another set of healthcare stakeholders stood outside in the rain handing out flyers. Their stark message — “Beware: CHS is unhealthy” — targeted a single company.
CHS is Community Health Systems, a Franklin, Tennessee-based operator of acute care hospitals. CHS and its affiliates own, operate or lease more than 100 hospitals in 20 states. The group outside was from National Nurses United (NNU), a union and professional association of registered nurses, which was protesting CHS and its CEO Wayne Smith, who was speaking at the conference.
The NNU flyer lists numerous grievances against CHS claiming it has closed hospitals and lost massive amounts of money. It also questions why Smith is still on board as CEO.
Indeed, just last month a CHS affiliate closed two Tennessee hospitals, according to Modern Healthcare. It also closed a hospital in Missouri last year. Further, CHS’ financial results have been far from ideal. It reported net losses of $110 million in the second quarter of 2018 and $325 million in the third quarter.
As for Smith, he earned $4.9 million in 2017, according to an SEC filing. That amount included $812,000 in non-equity incentive pay, compared to $640,000 in incentive pay he garnered in 2016. Smith’s performance has irked at least one CHS investor — Strategic Value Fund – that called for Smith’s ouster in 2017 and pointed out that the company has not improved its corporate governance despite committing to do so per a court-ordered settlement.
The NNU flyer also asks whether Smith is “protected by an overly friendly board.” Late in 2018, Axios reported on the relationship, noting that CHS appointed Elizabeth Hirsch, a former exec at industrial gas company Praxair — where Smith used to be a director with a seat on the board’s compensation committee — as a board member. Another CHS board member, John Clerico, is also a former Praxair executive. He now chairs CHS’ compensation committee. A 2017 proxy shows that Praxair sells medical oxygen and other industrial gases to CHS.
However, a cozy board isn’t the only thing that caused NNU to protest outside JPM.
“The event at J.P. Morgan is part of a longstanding campaign to encourage CHS to change its priorities to those that invest in patient care,” said Andrew Prediletto, a division director with National Nurses United, in a phone interview.
In fact, the union has a page on its site where nurses, doctors and patients can report inappropriate business or patient care practices that they’ve witnessed at a CHS or Quorum Health Corporation hospital. CHS spun off 38 hospitals in 2016 to create Quorum Health.
NNU has questioned CHS’ billing practices. A 2014 study from National Nurses United and its research arm, the Institute for Health & Socio-Economic Policy, examined the most expensive hospitals in the U.S. based on charge-to-cost ratios. The findings were based on Medicare Cost Reports as of June 2013, covering the federal fiscal year that ended September 30, 2012. It found six of the nine most expensive hospitals were part of CHS and Health Management Associates, which CHS acquired in 2014.
CHS did not respond to requests for comment sent to its corporate communications email address. Tomi Galin, CHS’ senior vice president of corporate communications, marketing and public affairs, didn’t respond to emails and a voicemail message.
Currently, NNU represents nurses at two CHS hospitals (Bluefield Regional Medical Center and Greenbrier Valley Medical Center, both in West Virginia) as well as nurses at two Quorum facilities (Watsonville Community Hospital and Barstow Community Hospital, both in California).
A nurse at one of those hospitals has noticed significant changes since CHS took over.
Union member Brenda Meadwell is an RN in the OB department at Bluefield Regional Medical Center in Bluefield, West Virginia. She has spent 33 years as a nurse, and her whole career has been at BRMC.
Before CHS acquired BRMC in 2010, there were typically six or seven nurses on the OB floor during a given shift. Now, Meadwell said, there are only three or four.
“We are so bare-bone staffed that it’s just ridiculous,” she said in a phone interview. “They’re calling it right-sizing. We’re calling it short staffing.”
She also said BRMC has experienced equipment shortages and has had to go without baby blankets. Instead, nurses have to wrap infants in towels. These issues have resulted in low morale among staff members, she noted.
Despite the conditions, Meadwell stays at BRMC because of how much she’s invested in the patients and community there.
But CHS is “all about the money,” she said. “What I would like to see them do is provide enough staff to take care of the patients the way they deserve to be taken care of,” Meadwell said.
Photo: Yevhenii Dubinko, Getty Images
