A Utilization Red Flag? Community Health Systems Volumes Fell Off in Q2
Investors pummeled shares of Community Health Systems Inc. July 24 after the hospital operator’s executives said admissions took a big step back in the second quarter and pointed to weakening consumer confidence as a major factor.
CHS, which is headquartered near Nashville and runs 70 hospitals in 14 states with more than 10,000 beds, also said CEO Tim Hingtgen will step down after more than four and a half years at the helm. He will be succeeded on an interim basis by President and CFO Kevin Hammons, effective Sept. 30.
On top of that, the company’s leaders said they’ve signed a $195 million agreement to have Labcorp Holdings Inc. take over CHS laboratory services assets and leases in 13 states late this year. The agreement includes some patient service centers and in-office phlebotomy locations.
The most notable development of CHS’ week, however, appears to be the reversal in patients’ utilization trends, which have been strong enough at the company and most of its peers for more than a year to force several notable insurers into lifting their medical care payment ratios. After a 2024 in which same-store admissions climbed 3.2 percent and a first quarter in which that figure climbed to 4.0 percent, CHS reported a year-over-year increase of just 0.3 percent for the spring quarter. On an adjusted basis, admissions fell 0.7 percent in Q2 after having averaged more than 2.6 percent over the previous five quarters.
In their earnings report, Hingtgen and Hammons pointed to the unholy trinity of “lower outpatient volumes, lower acuity and unfavorable changes in payor mix” as dinging CHS’ Q2 performance, which showed net income (helped by gains on the sale of hospitals) of $345 million and adjusted EBITDA down slightly year over year to $380 million.
On a conference call with analysts to discuss those results and their outlook, the executives pointed to consumers being more careful with money as a major factor in the drop in usage, particularly for surgeries. Hingtgen said federal law enforcement’s greater scrutiny of immigrant communities also looks to have contributed to some patients staying away from the healthcare system.
Shares of CHS (Ticker: CYH) plummeted $25 to $2.90 July 24 on the revised outlook. That drop that more than erased the stock’s gains year to date. The company’s market capitalization is now about $400 million.
Hingtgen and Hammons also were upbeat about CHS’ position in its markets for when consumer confidence returns. Patient volumes began to recover in late June, Hammons said, and have stabilized this month, albeit at a lower level than the CHS team had previously expected.
“There are times where volumes seem to dry up but they always come back,” Hammons said. “We believe that most of what happened this quarter was care that’s being deferred for financial reasons.”
On that front, there are other clouds on the horizon, however. The expected expiration of Healthcare Insurance Marketplace subsidies at year’s end as well as growing risks to Medicaid funding look to put pressure on the finances of both providers and payers in the coming years. Shares of Tenet Healthcare Corp. (Ticker: THC) fell about 15 percent over three days after its Q2 report in part because CEO Saum Sutaria declined to provide any early indications of what 2026 might look like.
About the Author
Geert De Lombaerde
A native of Belgium, Geert De Lombaerde has more than two decades of business journalism experience and writes about markets and economic trends for Endeavor Business Media publications Healthcare Innovation, IndustryWeek, FleetOwner, Oil & Gas Journal and T&D World. With a degree in journalism from the University of Missouri, he began his reporting career at the Business Courier in Cincinnati and later was managing editor and editor of the Nashville Business Journal. Most recently, he oversaw the online and print products of the Nashville Post for more than a decade and reported primarily on Middle Tennessee’s finance sector as well as many of its publicly traded companies.