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In January, Lutheran Health Network (LHN)-owner Community Health Systems (CHS) reached a $98 million settlement in response to 2011 charges against alleging fraudulent hospital admissions. As Becker’s Hospital Review reported (…/chs-executives-ink-…), “A Tennessee federal judge on Tuesday approved a $60 million agreement Franklin, Tenn.-based Community Health Systems and its executives inked with investors to resolve breach of fiduciary duty allegations…In the amended complaint, the investors claim CHS executives caused the company to implement an unlawful inpatient admissions policy, which allegedly enabled CHS to artificially inflate reimbursement payments…The settling defendants continue to deny the plaintiffs’ claims and didn’t admit any wrongdoing under the settlement [and] said they agreed to settle to avoid the expense, uncertainty, and risks of litigation.”

The settlement also required CHS to make governance changes, including the appointment of a lead director, the election of two new independent directors and the amendment of the compensation committee to include independent directors, as reported by the Nashville Post (…/chs-preps-big-governance-ch…).

The two new directors are Michael Dinkins, previously with USI Insurance Services, a private company owned by Goldman Sachs Capital Partners and also previously with Integer Holdings Corporation, a manufacturer of medical devices, and Dr. K. Ranga Rama Krishnan, Professor and Dean of the Rush Medical College in Chicago. Dr. Krishnan has also been Professor of Psychiatry and Behavioral Sciences at the National University of Singapore.

The background:
– Under the settlement agreement, the plaintiffs helped select six candidates from which the CHS Board chose two.
– Dinkins’ Goldman experience and Dr. Krishnan having lived in Singapore would suggest that two major owners of CHS (Goldman Sachs and Tianqiao Chen) now have connections to the board.
– NICHE is unaware of the current status for payment of the settlement–owed or now paid–but it has been a most unwelcome expense for a cash-strapped company.
– Chen has been quoted as saying he favors more rapid deleveraging/sale of hospital assets. This board may accommodate faster sales if a market already flush with hospitals for sale can find buyers. More pressure to sell hospitals may have implications for Fort Wayne.
– Rumors, of the watercooler kind, have been flying about possible local CHS sales. While unconfirmed, they suggest that three companies, including one local entity, may consider buying LHN’s Dupont Hospital. What gives some support to those rumors is that one or more of the medical practice specialties are reported to be musing about a place to land. That said, we live in tumultuous times and at the moment, this is more story than fact.