Assessing Community Health Systems’ focus on non-urban areas

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Major markets

Community Health Systems (CYH) operates in non-urban areas and select urban areas throughout the US.

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According to the US Census Bureau, 19.3% of the total US population resides in non-urban areas. Also, out of the total hospitals in the US, 40% are located in these areas. Most of these hospitals are non-profit hospitals.

Community Health Systems is one of the few for-profit hospitals, along with LifePoint Hospitals (LPNT), concentrating on these non-urban markets and providing a broad range of healthcare services. These services include general and specialty surgery, internal medicine, general acute care, emergency room, and critical care.

Other for-profit hospitals, like HCA Holdings (HCA) and Universal Health Services (UHS), concentrate on urban markets.

You can reduce your exposure to a single market by investing in the Healthcare Select Sector SPDR ETF (XLV).

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Major geographical markets

The major geographical markets of Community Health Systems in terms of revenues are Texas, Pennsylvania, and Indiana.

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The graph above shows that all the major markets have increased in revenue concentration from 2011 to 2013. The share of Texas in consolidated operating revenues has increased from 13.1% in 2011 to 14.8% in 2013. In the same period, Pennsylvania increased its share from 11.5% to 13.0% and Indiana from 10.3% to 10.5%. You can attribute these changes to several acquisitions that the company undertook, such as Tomball Regional Hospital in Texas and Memorial Health Systems in Pennsylvania.

Community Health Systems underwent a mega-merger with Health Management Associates in January 2014. After this, the company will also earn substantial revenues from its hospitals in Florida and Tennessee.

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