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With Apologies to Jonathan Swift

Community Health Systems (CHS) shares its many costs with Lutheran Health Network (LHN.) We must assume that at least some part of the $144 million cost of compensation for the top five CHS executives, as reported by Morningstar (2012-2106), was shared by LHN. Of course, CHS board members are each paid up to $400,000 per year. And NICHE suspects that five corporate jets are more than enough given the dwindling size of CHS. All this amid the shrinking of CHS’s shareholder value, as its market capitalization now stands at approximately $800 million, vs. $3-4 billion a few years ago.

But there are also costs that NICHE is told are posted directly to the benefit of LHN. One notable expense is the $1.1 million legal bill from CHS’s law firm in New York City. That would appear to be in great part related to the recent attempt by Fort Wayne Physicians, LLC–the Brave Ten–to buy the CHS interest in LHN. We assume that it will appear on the books either in Quarter 3 or 4–unless of course, CHS decides that it is only fair to absorb this cost, which amounts to a pittance given their Nashville spending pattern.

Then there are consultants. NICHE has learned that Mr. Mike Young is departing from LHN—a quick departure after recently being named network COO. We’ve been told his compensation has been $50,000 per month, but with expenses, it may have been higher or lower. Nonetheless, we understand that his services are on the books for LHN, and we must admit that purely for financial reasons, we bid him farewell since we can use that money elsewhere–perhaps to pay pediatricians, support a wellness program, or hire more consultants. We expect a visit from another Nashville consultant soon. We can only hope that his findings will signal a return to a five-star standing for LHN.

Some may say that CHS did not grow to become 206 hospitals strong, through bad management–that only a run of bad luck has reduced CHS to 135, or whatever today’s number may be. Perhaps, if we had paid CHS Executives and Board Members more, we would have received better outcomes? Certainly, things have gotten worse at CHS since its administration cut its own compensation. That is something to ponder as bills from CHS continue to hit the LHN books.