Tennessee hospital poised for sale

Community Health Systems, Inc. has sold several hospitals over the past 18 months, and the organization says it has reached a deal to sell another hospital.

This week, Community Health Systems announced it has reached a definitive agreement to sell Tennova Healthcare-Cleveland to the Hamilton Health Care System, a nonprofit system based in northwest Georgia. CHS said the 351-bed hospital, along with its physician clinics and outpatient services, will be sold for $160 million.

The deal requires regulatory approval, but officials hope the transaction will be completed by the third quarter of 2024.

CHS operates 71 hospitals across 15 states, but the for-profit system based in Franklin, Tennessee has shed some of its hospitals in recent months. During 2023, CHS completed the divestiture of eight hospitals and sold its majority interest in another hospital.

Assuming the deal is approved by regulators, Hamilton’s new acquisition will become the biggest hospital in the system. The system’s flagship, Hamilton Medical Center, is a 255-bed acute-care hospital in Georgia. Cleveland, Tenn., a city of about 48,000, sits just north of the Georgia-Tennessee state line.

In a statement on the deal, Jeff Myers, CEO of Hamilton, noted the system is one of the region’s few remaining independent healthcare systems.

“Above all, we are committed to the well-being of our region and keeping care local to the communities we serve,” Myers said in a statement. “Hamilton Medical Center and Tennova Healthcare-Cleveland share a proud history of serving the members of our respective communities – our friends, families, and neighbors – and we will invest in furthering that legacy to ensure long-term stability, the availability of advanced, comprehensive expert care, and a best-in-class patient experience.”

Jarrett Millsaps, CEO of Tennova Healthcare-Cleveland, said in a statement that Hamilton “has a demonstrated commitment to delivering quality care to the patients they serve across the communities they serve.”

“Our tradition of delivering medical services close to home will be enhanced through this alignment and the dedication and skill of our medical staff and employees,” Millsaps said.

Hamilton said the two hospitals will work together to improve care in the region, and the partnership could help in luring talent to the region. Hamilton said the acquisition could entice clinicians in specialty care to the region.

CHS also recently agreed to sell two hospitals in North Carolina to Novant Health in a $320 million deal. But the Federal Trade Commission is moving to block that deal, saying the transaction would lead to higher prices for consumers. North Carolina Treasurer Dale Folwell has filed a court document supporting the FTC’s position, arguing that growing consolidation in the state’s healthcare market is a concern.

Novant Health has argued that the FTC’s reasoning is flawed and the system says it wants to bring long-term stability to the two hospitals.

In December 2023, CHS completed the sale of three Florida hospitals to Tampa General Hospital in a $294 million transaction.

CHS could look at more divestitures as the system aims to reduce debt and improve its finances, Fitch Ratings said in a December 2023 note. Many CHS hospitals are based in smaller markets, suburbs and rural areas with more limited prospects for growth.

More hospital mergers and acquisitions have been taking place in recent months. There were 20 announced hospital deals in the first quarter of 2024, the highest of any first quarter since 2020, according to Kaufman Hall, the healthcare consulting firm.

Analysts have said they expect to see more hospital mergers in 2024. In 2023, there were 65 announced hospital mergers and acquisitions, up from 53 the year before.