Select Page

In an article entitled “These Hospital Bonds Are On Life Support” (…/a-49-billion-hospital-emergency…), Bloomberg’s Lisa Abramowicz and Max Nisen report that Community Health Systems (CHS) debt is 20 times the value of its equities. Investors in debt are, they report, “simply turning a blind eye to the ugly balance sheets of hospital operators amid an increasingly difficult backdrop. Federal programs like Medicaid are clamping down on costs.“

When will it end?
– NICHE followers will recognize the litany: higher insurance premiums, tougher federal policy affecting hospitals, and inconsistent cash flows. All this means falling earnings (the “E” in EBITDA) and, for CHS, a greater percentage of earnings spent on interest payments. The end of these troubles is not in sight for CHS.
– Locally, what we’ve seen is only the beginning. IU Health is slowly expanding and is likely quite willing to work with Lutheran Health Network. LHN earns enough money here to invest, but will they invest sufficiently in quality, personnel and new equipment? Or, will the money continue to flow to Tennessee? That needs to end in a short time or Lutheran Hospital will not remain a tertiary facility.
– The physician shortage is getting worse, but IU Health’s growth here is very good news for northeast Indiana. That growth could reverse Fort Wayne’s increasing shortage of nurses and physicians contributed to by a shrinking CHS, which the Bloomberg article above says is “Circling the Drain.”