Becker's Hospital Review

26 CFO / FINANCE CHS' annual net income drops 39% By Marissa Plescia F ranklin, Tenn.-based Community Health Systems posted net income of $368 million in 2021, a 39.3 percent decrease from the $607 million recorded in 2020, according to its financial results re- leased Feb. 16. e health system — which has 83 hospitals in 16 states — reported an operating revenue of $12.4 billion for the 12 months ended Dec. 31, 2021, up 4.9 percent from 2020 when op- erating revenue was $11.8 billion. CHS' operating expenses increased slightly in 2021 to almost $11 billion, which is a 2.8 per- cent increase from 2020 when expenses to- taled $10.7 billion. Salaries and benefits were the biggest expense at $5.2 billion in 2021, a 3.1 percent decrease from 2020. e system's operating income rose by 24.5 percent to $1.4 billion in 2021. In 2020, the health system's operating income was $1.1 billion. CHS lost $39 million from the sale of equity interests in Macon (Mo.) Healthcare in 2021, according to the financial report. For the three months ended Dec. 31, 2021, CHS reported a 36.6 percent lower net in- come at $223 million, compared to $352 mil- lion in the same period in 2020. CHS posted a net revenue of $3.2 billion in the fourth quarter of 2021, up from the $3.1 billion recorded in the same period in 2020. Its operating expenses increased by 4.7 per- cent year over year in the fourth quarter, from $2.7 billion in 2020 to $2.8 billion in 2021. e system saw a slightly lower operating in- come for the fourth quarter of 2021 at $424 million, compared to $435 million in the same period of 2020. "e company delivered a solid year, with positive trends across a number of indica- tors, due to the successful advancement of multiple strategic and operational initiatives," CHS CEO Tim Hingtgen said in the report. "During the fourth quarter, our healthcare providers and hospital leadership teams in our affiliated markets continued to provide essential COVID and non-COVID care. We remain incredibly grateful for their continued dedication throughout the course of the pan- demic. As we move forward, we expect the company's focused investments and opera- tional initiatives to drive incremental growth and drive value for all stakeholders." n Hospitals are facing fiercer competition for physicians in the worst-paying specialty By Molly Gamble P rimary care physicians are the gateway to more ex- pensive specialists, and health systems face intensify- ing competition for them, thanks to insurers, retailers, investment firms and tech start-ups, Bloomberg reported. Primary care specialties, including pediatrics, family med- icine and internal medicine, are among the lowest-paying in medicine, yet these specialties wield great influence over healthcare costs. For every $1 invested in primary care, $13 is saved in downstream costs, Oregon found in an evaluation of its primary care home program. "If you're going to ultimately solve the cost crisis, we have to do a better job of taking care of people with chronic disease," Tim Barry, CEO of VillageMD, told Bloomberg. The venture-backed company serves 1.6 million patients in more than 250 locations. Competition for primary care physicians is fueled by great- er demand from companies not classified as hospitals, but also a tightening supply of these physicians. The pandemic brought on financial stress for independent practices, with some physicians seeking early retirement. About 7 in 10 American physicians worked for health systems or corpo- rate owners at the start of 2021, up from 6 in 10 in 2019. "It really is about moving the center of gravity, from patients being managed by hospital systems to really being man- aged by primary care doctors," Annie Lamont, co-founder of venture firm Oak HC/FT, told Bloomberg. Oak HC/FT has invested in primary care startups such as One Medical and VillageMD, which are two of several primary care com- panies with big money behind them. A few takeaways on non-hospitals' primary care footprints: • UnitedHealth's Optum unit now has more than 60,000 employed or "aligned" physicians, with about half in pri- mary care. • CVS Health, parent of insurer Aetna, plans to put physi- cians in up to 350 of its retail stores. • Humana plans to open 26 more CenterWell clinics this year, bringing primary care to about 250 locations, with plans to add 30 to 50 more annually. • Walgreens plans to install physician clinics in 1,000 of its stores by 2027 through its partnership with VillageMD. n Competition for primary care physicians is fueled by greater demand from companies not classified as hospitals, but also a tightening supply of these physicians.

• Cover