Publicly Traded Company - Community Health Systems - Case Study Example

Evaluation of Publicly Traded Company Community Health Systems Community Health Systems Community Health Systems (CHS) is a large for-profit healthcare organization with its home base in South Nashville Tennessee. The organization owns 120 hospitals in 29 states with approximately 18,000 licensed beds. In about 65% of the markets that are served, they own the only hospital in town. The generated approximately $12.1 billion in revenue in 2009. This paper will analyze the business model of CHS.(CHS, 2010). The present business model used according to CHS is : to effectively integrate acquisitions and improve hospital operations. This would include major renovations and expenses, information system upgrades, new equipment upgrades, and new service line enhancements. The leadership model is leadership with a vision. Their expectation of management is that they will make sound management decisions and leadership that sets a company standard of excellence. CHS does not really advertise a mission statement per se. They do have a Statement of beliefs and principles. The elements in that statement are: Recognized the value of each employee providing high quality, personalized care Encourage employee involvement in quality improvement Advocate standardization of companywide programs Committed to involving physicians in partnership Devoted through services, quality and innovation Dedicated to compliance with federal, state and local laws (CHS, 2002) A SWOT analysis is in essence a situational assessment of how a company or organization stands within the business that they do. There are three very distinct components that make it up and those are market assessment, the mission, the vision and values and the internal assessment. The SWOT itself is the Strengths, weaknesses, opportunities, and threats of this organization. The SWOT for CHS would look like that following: S- CHS is a strong organization well supported by a large capital base with income from 120 hospitals and a large stockholder base. Many of the stockholders are employees and they have the opportunity for gain as well as the stockholders. The corporate leaders are highly recognized, in fact the corporate CEO, Smith, is recognized as one of the most important CEO's in the healthcare world. He has much experience and has gleaned a very loyal following in his leadership team (Watkins, 2002). W-It is no longer a surprise when CHS elects to take over a hospital or group of hospitals. This was a major advantage when they did the hostile takeover of the Triad corporation. This puts all hospitals on the alert when they see any type of negotiations that may reflect the involvement of CHS. Another weakness that is seen as a strength within the Corporation is the need to make every department in a hospital the same in every hospital. It does provide them with consistency within the Corporation but it does not allow any creative vision from the people within these departments. O-For a company like CHS, there are always opportunities. In this case there is the failing hospital in the medium size town that they have the cash to purchase, even though the hospital does not want to be. CHS, in their business model statement, clearly states that they concentrate on the effective integrating of acquisitions and improving hospital operations. The average number of Directors that leave a hospital that has been taken over by CHS is 6. This is definitely a weakness and shows itself in their postings for available positions. A position that is especially vulnerable is the CNO position (CHS, 2008). T-The threats to a Corporation like CHS is the bigger Corporation. Most of their threats are external in nature. Is it possible to have a Corporate take over from another company It is not likely but it was also not likely at the time that this would happen to Triad, either. This is always a possibility when you are a publicly traded company. This is real time trading today on the stockmarket. The strategic objectives for CHS are to continue to grow. Their primary goal is to remain solvent, continue to purchase small hospitals that are single hospitals in medium size towns and continue to grow the network. Mr. Smith says there are not bad hospitals but there are bad markets (CHS, 2008). In other words, he can purchase a hospital that is not doing well when the reason they are not doing well is not related to the market they are in and make them a successful hospital by changing the way they do business and putting capital into their business. Though these objectives are admirable for increasing the size an already large (largest hospital system in the US now) they also create quite bit of controversy with the public. It is still very difficult for the average public to see healthcare as a profit making venture, not realizing that is one of the largest profit making ventures in American today. CHS now has hospitals in 29 states. They would like at least one hospital in every state says Smith (2008) which would improve the network for the future. This has everyone looking around and wondering if they are next. Though these hospitals, on the average, are successful, no one wants their community hospital purchased by a for profit organization. There are a couple of reasons for that. Many understand that their bill will have to be paid faster in a for profit organization and if they do not pay their bill there may be fewer services available to them (Burchbinder & Shanks, 2007). There is a also a matter of pride in the local hospital that is supported by the public. However, it is probably not run extremely well, if CHS is coming to purchase. They, however, do not have specific plans to purchase right at the moment as they have just purchased 6 more hospitals on the West Coast. There is always risk in a major business purchase, however from the look of their stock outlook above, there are not too many expectations of problems. However, with the market and the economy the way it has been in the recent past, there are always possibilities of hospitals falling into Mr. Smith's bad market areas. I have to admit that if I were a stockholder or a member of the Senior level of this Corporation, I would change very little. CHS is extremely successful as a for profit organization. They expect to be even more profitable. They have the most valued Health Care CEO in the country and there are very few competitors at this time, and one of the major ones (HCA) has gone private for now. That does not mean that there is not risk, a new Triad group has emerged with a CEO at the helm that has been extremely successful before and may be again. This could eventually affect CHS but I am sure that Mr. Smith is already ready for that contingency. In conclusion, there is a great deal going on in the healthcare industry at this point and it appears that CHS is right in the middle of most of it. They have made many hospital purchases over the last five years and there is a plan to purchase even more. With HCA gone private and Triad only beginning to rebuild, the competition is not very worrisome. The side effect of all of this, however, is that CHS has gained a reputaion of the hospital mill system. They are the ones that come in and use up your hospital and then turn around and sell it. SWOT analysis shows very little risk for them but just like their purchase of Triad, there is always the hospital system system who has put enough case back to do a hostile takeover. References https://www.chs.org Buchbinder S. & Shanks N. (2007). Introduction to Health Care Management :Jones and Bartlett; Massachusetts. Watkins, S. (2002). Community health systems inc. Investor's Business Daily. Community Health Continues Acquisitions Spree (2002). Health Care Strategic Management. Read More