After serving in Group Well being Techniques’ prime job for greater than twenty years, CEO Wayne Smith introduced Tuesday he is stepping down on the finish of 2020.
Smith, who has led the for-profit hospital large since April 1997, will transition to government chairman of CHS’ board on Jan. 1, 2021. On the identical day, CHS’ Chief Working Officer, Tim Hingtgen, will take over as CEO.
Smith, 74, catapulted Franklin, Tenn.-based CHS by way of years of growth and, later, calculated contraction. Final 12 months, his complete compensation was $eight million.
“Principally, Wayne was Group Well being,” mentioned Brian Tanquilut, a healthcare fairness analyst with Jefferies. “His identify was synonymous with the corporate.”
A perennial member of Trendy Healthcare’s 100 Most Influential Individuals in Healthcare, the transition comes as CHS continues to promote underperforming hospitals.
Below Smith’s watch, CHS added greater than 50 hospitals in 2007 with the acquisition of Triad Hospitals, Inc., which included the subsidiary Quorum Well being Assets. In early 2014, Smith oversaw CHS’ ill-fated buy of fellow for-profit chain Well being Administration Associates, a deal that added about 70 hospitals to its ranks. The corporate had 93 hospitals as of Sept. 30.
The 2014 HMA deal plunged CHS into monetary struggles, an aggressive marketing campaign to unload underperforming hospitals and a $262 million settlement with the federal authorities over false billing and kickbacks for alleged actions that earlier than the acquisition.
Since then, Smith has led an aggressive turnaround plan that some within the business say is paying off. In 2016, CHS spun off 38 hospitals and a consulting agency that turned Quorum Well being Corp., an organization that just lately emerged from chapter.
Lots of CHS’ hospitals are positioned in rural or mid-sized markets, that are in a very tough monetary place. Nonetheless, Tanquilut mentioned Smith has proven the corporate’s willingness to make strategic strikes to adapt to the altering atmosphere, equivalent to with the Quorum spinoff.
“I believe that is going to be his legacy: He was in a position to develop the enterprise through the years and actually set up himself as a key participant within the broader U.S. healthcare business,” Tanquilut mentioned.
CHS’ funds have proven indicators of enchancment following the hospital gross sales. The corporate narrowed its internet loss to shareholders to $675 million in calendar 2019 on $13.2 billion in internet working income, in contrast with a $788 million loss on $14.2 billion in working income in 2018.
Within the third quarter of 2020, which ended Sept. 30, CHS grew its revenue attributable to shareholders to $112 million, in contrast with a internet lack of $17 million within the prior-year interval.
Chip Kahn, CEO of the Federation of American Hospitals, a for-profit hospital commerce group, mentioned CHS is clearly on an upswing due to the divestiture program. Like the remainder of the business, the corporate has confronted a “great headwind” with the COVID-19 pandemic. CHS’ volumes have taken a success amid the continued pandemic. Identical-store admissions, which account for divestitures, fell 6.2% within the third quarter of 2020 year-over-year.
As for the hospitals CHS has bought, practically 80% have been working at a loss, bankrupt or closed as of February 2020, a Trendy Healthcare evaluation discovered.
Previous to becoming a member of CHS, Smith was chief working officer at Humana. He labored in varied administration positions for the publicly-traded well being insurer for 23 years.
Smith serves on the board of Auburn College and as its president professional tempore. He beforehand served on the board of Praxair from July 2001 till its merger with Linde AG in October 2018. He is additionally the previous chair of the board of the Federation of American Hospitals. He earned bachelor’s and grasp’s levels from Auburn College, and earned a grasp’s diploma in healthcare administration from Trinity College in San Antonio, Texas.
Kahn mentioned he views Smith as a frontrunner within the business who understands the intersection of enterprise and coverage.
“I believe his sturdiness speaks for itself when it comes to his accomplishments there,” Kahn mentioned.
CHS mentioned Hingtgen’s promotion is a part of a longstanding succession plan. He has been CHS’ COO since 2016. He joined the corporate in 2008.
Whereas different for-profit hospital chains have both given again or reversed federal coronavirus reduction grants due partially to altering guidelines on retaining the cash, CHS mentioned it doesn’t plan to take action. CHS acknowledged $448 million in grants within the first half of 2020, and the federal authorities’s latest steerage launched final week lets suppliers maintain funds as much as the quantity of their year-over-year income distinction from 2019 to 2020.
CHS mentioned it has one other $271 million in grant funding it has not but acknowledged as revenue. It is nonetheless unclear how a lot of that will probably be in a position to acknowledge.
In a press release, Smith referred to as serving as CEO of CHS “one of many biggest experiences of my life.” “Over greater than twenty years, my confidence on this firm has by no means wavered,” he mentioned. “Our dedication to caring for sufferers and offering worth for our communities has at all times come first — regardless of the challenges — and we’re proud that we now have made a optimistic distinction within the lives of thousands and thousands of individuals.”