FORT WAYNE, Ind. (WANE) – There are growing questions about the future of Lutheran Health Network, amid months of controversy and upheaval.
Multiple sources told NewsChannel 15 that Wednesday’s announcement to build a new St. Joseph Hospital in downtown Fort Wayne may have been prompted by other potential changes in healthcare that are yet to come.
Some health industry insiders believe another large hospital group in Indiana could build a facility here or might even make a play to buy Lutheran Health Network from its parent company, Community Health Systems.
During this week’s announcement about St. Joe, Lutheran CEO Mike Poore didn’t reveal details about the new hospital, only saying that an offer has been made to purchase property close to the current facility on Broadway and Main. Hospital officials are still working on plans for the new building, which is part of the $500 million in upgrades and renovations CHS first announced in May.
With so few specifics being released, many questioned the timing of the announcement and speculated that it could be a preemptive strike against a future rival.
On Thursday, Bloomberg printed a scathing article on Community Health Systems. It mentioned Fort Wayne specifically and highlighted CHS’s troubled finances and mounting debt. Bloomberg reporter David Welch said given the company’s history, it’s not surprising that people here are skeptical about the future of Community Health Systems.
“This is a company that at the end of the second quarter had almost $15 billion in debt and only about $770 million in cash on the books,” Welch said in an interview with NewsChannel 15. “Now, the 500 million [investment], they’re gonna spend that over 5-6 years, so it’s conceivable they could. But you’re still talking about a company that selling assets to pay down debt and doesn’t have a lot of money compared to the amount of money they owe.”
With regards to speculation that a third hospital group could come to Fort Wayne, Welch said he isn’t sure whether it would compete with Parkview and Lutheran directly or would attempt to buy Lutheran and take over.
“I’m not sure about the likelihood,” said Welch.” In mergers and acquisitions, everyone has their price. Clearly $2.4 billion [the offer CHS rejected in May] wasn’t the price. But they may be willing to do it. They’ve sold 30 other hospitals so I think if you look at CHS and their portfolio then for the right price they’d probably consider any offer. And really given the condition of the company and the unrest among some of the stockholders in CHS, I think they have a fiduciary responsibility to look at any offer that comes their way.”
What’s next? Sources said something is going to change, but what exactly those changes will entail remains to be seen.
Josh Nemzoff of Nemzoff & Co., which advises hospitals on sales and acquisitions, was quoted in the Bloomberg article as saying, “At some point you reach a dead end, and you can’t cut the expenses anymore.”
He later told NewsChannel 15 that he predicts CHS will be forced to declare bankruptcy within a year.
A Lutheran Hospital spokesman directed our questions to CHS. No one from CHS has responded.