Community Health Systems: Regional and patient-care networks

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Adapting to Obamacare

With the implementation of Obamacare reforms, the healthcare industry is now developing new methods of providing quality care to patients.

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Regional networks

Community Health Systems (CYH) has 11 major networks in key states, including over 30% affiliated hospitals. Out of a total 196 operational hospitals, 194 participate in the various networks. The company has hospitals in nine of the top ten states with the highest uninsured populations.

As Obamacare implementation progresses, more health insurance plans will be sold in these states, providing additional revenue opportunities for Community Health Systems. Although the pricing for these plans is offered at a slight discount to commercial rates, the increasing volume of insured patients will offset the loss. Year-to-date, Obamacare has benefitted the company to the tune of between $95 million and $160 million.

Patient-care networks

Community Health Systems has developed collaborative arrangements with physicians in the retail clinic area, and is attempting to create affiliations and partnerships with urgent care providers. The company is also creating affiliations and joint ventures in acute care areas such as outpatient surgery and diagnostic imaging.

Community Health Systems has also initiated patient-transfer centers that can shift patients suffering from emergency medical conditions to its hospitals. The variety of physician practices affiliated with Community Health Systems is giving more patients access to preventive health services. In effect, the company’s networks are providing a complete suite of services to patients.

Other hospital operators including HCA Holdings Inc. (HCA), Tenet Healthcare Corporation (THC), and Universal Health Services, Inc. (UHS) are also extending their networks by collaborating or acquiring physician practices and other outpatient service centers.

Investors considering broad exposure to the healthcare industry might consider the Healthcare Select Sector SPDR Fund (XLV).

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