Community Health Systems of Franklin, Tenn., has completed its acquisition of Hospital Management Associates in a $7.6 billion deal that gives CHS ownership of 12 of HMA’s former Mississippi hospitals and medical facilities, including four in metro Jackson.
The transaction creates the nation’s second largest for-profit hospital chain by revenue, with more than 206 hospitals in s in 29 states.
The organization’s affiliates employ more than 135,000 people and about 27,000 physicians serve on the medical staffs of CHS-affiliated hospitals. CHS’s headquarters will remain in the Nashville suburb of Franklin.
The transaction provides CHS with increased scale and broader geographic reach. “Our larger organization is well positioned to address the changing dynamics in our industry,” said Wayne T. Smith, chairman and CEO.
With the acquisition, CHS takes on the legal baggage of Hospital Management Associates, whose subsidiary Health Management Associates is alleged in more than a half dozen whistle blower lawsuits to have systematically pressured physicians to make admissions to its hospitals, and is reported to have granted bonuses to the most compliant physicians. The lawsuits, which the Justice Department joined earlier this month, claim that along with the incentives, physicians received threats if they failed to hit admissions targets. The scheme, regulars say, was aimed at inflating the company’s payments from Medicare and Medicaid by making unnecessary admissions.
CHS itself faces similar accusations that it inappropriately increased admissions, the New York Times reports. The Times says CHS is seeking a settlement with the government over some of the accusations.
Analysts say some for-profit hospital companies regard the penalties assessed by government regulars as just the cost of doing business. They say that for the penalties to carry any punch they must rise to at least the $500 million level..
CHS, in an email statement from spokeswoman Tomi Galin, insisted Community Health Systems organization is committed to acting ethically.
“We have a robust compliance program designed to help ensure that operations at our affiliated hospitals and across the organization are conducted in accordance with high ethical standards and all federal, state and local laws, rules and regulations,” she said.
“Our program includes a process by which employees, physicians, vendors and patients and their families can report any concerns. When we receive a notification of a concern, it is investigated and resolved.”
CHS compliance efforts, she said, include monitoring compliance with Medicare rules for the admission of hospital inpatients as well as other patient classifications.
In Mississippi, HMA had a months’ long standoff with Blue Cross and Blue Shield of Mississippi over reimbursement levels the insurer was having to pay HMA. The fight started in early fall with an HMA lawsuit seeking $around $15 million in additional patient reimbursements. The standoff finally ended shortly before Christmas.
In a statement late in the impasse with HMA, BCBS of Mississippi complained about excessive reimbursement charges for treating BCBS patients. The statement came as BCBS offered to reinstate Gilmore Memorial Regional Medical Center in Amory, Northwest Mississippi Regional Medical Center in Clarksdale, Tri-Lakes Medical Center in Batesville and Woman’s Hospital in Flowood.
“As to the other HMA hospitals, significant issues regarding HMA’s charges and lack of focus on managing healthcare costs are still of great concern,” BCBS of Mississippi said.
“As HMA continues its efforts to distract the public from the fact that HMA hospitals charge significantly more than other hospitals in their service area, Blue Cross & Blue Shield of Mississippi will continue to take care of its members’ health.”
The New York Times detailed accusations against Health Management Associates in a lengthy front-page article Jan. 24.
BCBS of Mississippi declined to comment Monday on either the Community Health Systems’ takeover of HMA or the Times’ article.
It indicated, however, that it expects health-care providers that treat its policyholders to be partners in keeping down costs and to provide only services that are truly needed. “Blue Cross & Blue Shield of Mississippi is committed to ensuring our members receive the highest quality of care from a network of providers and facilities that are equally committed to managing the cost of healthcare. The goal of all of our partnerships is to provide service that is always in our members’ best interest,” said Meredith Virden, communications manager for BCBS of Mississippi.