April 29, 2011 at 09:34 AM EDT
CtW Investment Group Responds to Community Health Systems Investor Presentation

WASHINGTON, April 29, 2011 /PRNewswire/ --The CtW Investment Group urges Community Health Systems (NYSE:CYH) shareholders to Vote "Against" the Re-election of James Ely III, John A. Fry, and W. Larry Cash given their seeming failure to timely and decisively respond to the expanding scandal concerning investigations into CHS' Medicare billing practices, which has precipitated a 25% decline in Community's market value.

Community filed with the SEC this morning a 109 page presentation in which it purports to refute much of the analysis used by Tenet Healthcare Corporation (NYSE:THC) in its lawsuit against Community.  The CtW Investment Group remains troubled that the company's analysis does not speak specifically to the questionable billing practices we outlined in multiple communications to the Community board and shareholders.  These letters, and a fact sheet outlining concerns that Community has yet to address can be found on our Web site www.ctwinvestmentgroup.com, and CtW will be communicating these concerns to shareholders.  Below we highlight a few key points:

  • The company acknowledges in today's presentation that Medicare ER Admission Rate and Medicare One-Day Stays, both of which were used in CtW's analysis, are relevant metrics for the analysis of billing practices.
  • Community addresses the importance of the Program for Evaluating Payment Patterns Electronic Report (PEPPER) criteria to identify outliers by one-day stays, as we had also pointed out in our Sept. 28th letter.  However, by looking at the one-day stay rate of their system as a whole, they ignore the concerns we pointed out in our letter that many of their hospitals are individually above the 80th percentile.  PEPPER seeks to identify individual hospitals that are above the 80th percentile for one-day stays, not system wide averages.
  • Most of their data is for 2009 alone, which fails to show the trend in one-day stays once a hospital has been acquired by Community.  However, the research from our previous letter suggests the longer a hospital is under Community management, the greater the one-day stay rates for that hospital increase.  The charts that do examine several years of data still fail to address this question because they calculate rates that average across all of Community's hospitals.

In our view, Community's efforts seem more intended to obfuscate than to educate investors as to which metrics are the most relevant and whether the data are statistically significant.  Yet, Community has yet to address the fact that the board of directors was slow to respond to evidence of aggressive Medicare billing practices.  These concerns were brought to their attention more than six months ago, and the CtW Investment Group believes the board missed a critical opportunity to proactively address the issues before they became the subject of litigation and investigations by state and federal regulators.  

SOURCE CtW Investment Group

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