Community Health Systems Inc., the Tennessee-based hospital operator that owns Rockwood Health System in Spokane, reported during a first-quarter earnings investor call last month that it has transactions underway to divest itself of 10 hospital facilities and other nonhospital operations. A hospital executive told investors that CHS could sell 20 more hospitals over the next 18 months.

Tomi Galin, a CHS spokeswoman, says the company estimates the sale of those first 10 hospitals could generate net proceeds of $530 million. 

Galin says company CFO Larry Cash told analysts and investors that CHS hopes to build up services in the markets where it owns multiple hospitals, as well as enhancing some specialties including orthopedics and cardiology in certain markets where it only has one hospital. CHS has 11 such hubs, around which 73 of its hospitals operate.

The Rockwood Health System here that CHS owns includes Deaconess Hospital, Valley Hospital, and Rockwood Clinic. According to its website, Rockwood Health System sees more than 160,000 patients a year and employs more than 350 physicians and other providers, representing with a total workforce of more than 1,450 employees.

During the first-quarter earnings investor call, Cash said the 10 unnamed hospitals that CHS plans to sell have profit margins in the single digits, as opposed to total margins for CHS hospitals more traditionally averaging 15 percent. 

“We will continue to divest hospital operations that cannot meet these criteria and that are not productive to our results,” Cash said

He also noted that eight hospitals that CHS operates in Florida and two others in Tennessee, many of which were acquired in the 2014 purchase of Health Management Associates, are at the center of CHS’s earnings decline. Cash didn’t specify whether those troubled hospitals in Florida and Tennessee were the 10 currently for sale.

The move to divest more hospitals follows CHS’s divestiture this past April of 38 hospitals that it spun off into an independent company named Quorum Health Corp. 

With the Quorum spinoff, CHS now operates in 22 states, seven fewer than before the divestiture. 

Galin says that during the same earnings call, Wayne Smith, chairman and CEO of CHS, indicated the company’s portfolio of hospitals could end up being trimmed down to between 140 and 150 facilities. 

“We would like to end up with 140 or 150 hospitals that are sustainable in markets that have some growth potential and where we have the ability to add assets to those and enhance the networks or enhance those markets, improve the margins,” Smith said.  “I think we’re on track to do that.” 

Although CHS has yet to specify which facilities or markets might be affected, Galin says CHS, “does intend to make an announcement at the appropriate time.”

She adds, “Additional divestitures are possible over time in order to direct our resources to hospitals and regional health networks where we can most effectively enhance health care services.”

In its first quarter earnings report, CHS listed net income of $11 million, down 86 percent from $79 million for the same period last year. CHS also saw its adjusted EBITDA, or earnings before interest, tax, depreciation and amortization fall to $633 million compared with $715 million for the same period of 2015. The company’s revenue for the first quarter rose 2 percent from $4.9 billion to $5 billion. 

With the upcoming divestitures, Galin says CHS intends to help new buyers during ownership changes. 

“In any market where a divestiture should occur, we will work to facilitate a smooth ownership transition in order to maintain quality of care and continuity of services for local residents,” she says.