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January 20, 2017

Wayne Smith shakes off ‘HMA-itis,’ grills analysts on health care’s future

Wayne Smith shakes off ‘HMA-itis,’ grills analysts on health care’s future

Eleanor Kennedy | Nashville Business Journal

“HMA-itis” is not contagious. Wayne Smith wants to be sure you know.

The often colorful chairman and CEO of Franklin-based hospital giant Community Health Systems Inc. assured the crowd of that fact at the start of the Nashville Health Care Council’s “Wall Street” panel, an annual gathering where Smith turns the tables on the analysts who usually pepper him and his peer public company CEOs with questions.

In the wake of CHS’ year of challenges, Smith started things out with some self-effacing humor, noting that while it might be hard to tell from his company’s stock price (which has fallen nearly 90 percent over the past two years to just over $6), he is still “alive and well.”

After reiterating his confidence that CHS (NYSE:CYH) is on the path toward recovery following the blows suffered from its 2014 acquisition of Florida-based Health Management Associates, Smith steered the analysts into the prediction business, seeking — as investors and analysts had of him last week at the J.P. Morgan Healthcare Conference in San Francisco— some sort of clear prediction of what a Trump presidency means for health care reform.

The answer?

“I don’t have a clue,” said Whit Mayo, managing director with Robert W. Baird.

Overall, the panelists said, it seems there are several players involved in the health care reform conversation who prefer a slow transition from the Affordable Care Act to its ultimate replacement, a move that would give the industry time to adjust to whatever the new model may be. The success of Medicaid expansion — in the states that did expand it — suggests a program built around covering more people through Medicaid would be a logical core for a Republican replacement, Smith and the analysts said, though the federal money within that program would likely be delivered through block grants or another alternative structure.

A few other hot topics and big takeaways from the event:

  • Consumerism is real, even if it’s just for marketing purposes. Health care is moving, as it has been for the past several years, a to a more consumer-facing environment that looks and works a bit more like other industries. Chris Rigg, an analyst with Deutsche Bank, said changes, technologies and advertising that entice patients like traditional consumers does have an impact, at the very least by drawing those patients to one system over others.
  • Envision Healthcare is hot. The company formerly known as AmSurg Corp., now part of the newly combined Envision Healthcare Corp., is one to watch. Nearly all the analysts included the physician services and ambulatory surgery center company as a potential top pick for the year to come, although some pre-merger struggles at Colorado-based Envision could make the integration a bit of a challenge.
  • Don’t count CHS out yet. Before asking for those top picks, Smith joked about a company that had a tough 2016, but, given it’s single-digit stock price, could be poised for a huge uptick – at least in terms of percentage growth. A few of the analysts agreed with CHS’ potential for a rebound, especially if the next generation of health care reform is structured in a way that will benefit hospitals. Beyond that, Envision, hospital giant HCA Holdings Inc. and Franklin-based behavioral health behemoth Acadia Healthcare Co. were the big favorites for the year to come. 

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