QUOTE AND NEWS
Market Intelligence Center  Mar 30  Comment 
MarketIntelligenceCenter.com's patented algorithms have selected a trade on Community Health Systems Inc (CYH) that returns 3.45% in 81 days for an annualized return rate of 16%. This diagonal spread pairs a short position in the Jun. '15 $50.00...
Motley Fool  Mar 28  Comment 
Love Obamacare? These stocks are right up your alley.
Market Intelligence Center  Mar 18  Comment 
Community Health Systems Inc (CYH) traded between $50.53 and $51.79 before closing at $51.41 Tuesday and presents some attractive trading opportunities today. MarketIntelligenceCenter.com’s algorithms have picked a Jun. '15 $50.00 covered call...
Forbes  Mar 1  Comment 
Hospital operators continue to see profits and revenue not seen in a decade thanks to the Affordable Care Act and related efforts to sign up uninsured patients to coverage so facilities can reduce unpaid medical bills. Large hospital operators HCA...
Benzinga  Feb 20  Comment 
CollabRx Inc (NASDAQ: CLRX) -36% - Announced 3.84 million share offering. Noodles & Co (NASDAQ: NDLS) -28% - Reported Q4 EPS, downgraded at multiple firms. TrueCar Inc (NASDAQ: TRUE) -6.6% - Released Q4 EPS, offered Q1, FY2015 sales...
Market Intelligence Center  Feb 17  Comment 
After closing Friday at $48.14, Community Health Systems Inc (CYH) presents an attractive opportunity to get a 9.24% return in just 122 days, which is an annualized return of 27.64% (for comparison purposes only). To enter this trade, sell one...
Benzinga  Jan 20  Comment 
In a report released Tuesday, Sterne Agee commented on Community Health Systems' (NYSE: CYH) pre-announcement of its fourth quarter and full year 2014 results. Although the company reported solid admissions growth, revenue and EBITDA came in...
Market Intelligence Center  Jan 20  Comment 
For a hedged play on Community Health Systems Inc (CYH) MarketIntelligenceCenter.com’s algorithms selected the Mar. '15 $50.00 covered call for a net debit in the $47.06 area. That is also the break-even stock price for the covered call. This...




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Community Health Systems (NYSE:CYH) owns and leases over a hundred hospitals in 29 states, primarily in rural communities.[1] While the company's growth is partially organic, the bulk of revenue increases have resulted from acquisitions, such as the purchase of Triad Hospitals Inc. which doubled the size of the CYH network, in terms of beds, and made it the largest publicly traded hospital operator chain in the country. The company earned $12 billion in revenue and $243 million in net income in 2009.[2]

As U.S. demographics change - and trend toward urban or rural relocations - so do CYH's revenues. Population size and economic cycles help determine the number of potential patients living close to CYH's hospitals and the amount of healthcare they need. Medicare and Medicaid laws also impact the company's operating income, and the growing quantitative gap between insured and uninsured and/or underinsured patients are concerns as more private clinics and physician-owned hospitals attract the most expensive and specialized medical procedures funded by private insurance. To stave off competition from these smaller, more nimble providers, the firm often forms partnerships with them.

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Competition

Community Health holds a virtual monopoly in most of its markets simply because its hospitals are the only providers of emergency care services in the vicinity. This is common to most American rural hospitals and reflects years of industry consolidation. Thus, the firm's primary competition is not other area hospitals, but rather urban hospitals, which patients often choose for specialized care. The firm competes by recruiting more specialists and investing in new technology in order to widen the range of services available to patients.

Compared to its urban counterparts, Community Health's hospitals have several operational advantages that help them achieve higher margins. A rural location gives hospitals the benefit of less competition, since many are monopolies in their communities. In addition to making more flexibility in pricing possible, this type of market power can bolster a hospital's reputation, encouraging positive relationships with patients and local physicians. Furthermore, patients treated at rural hospitals often have less complex health problems, as those with more advanced illnesses tend to travel to urban hospitals to receive care. This results in a lower cost structure, as more common medical issues can be treated with fewer expenses. Finally, Community Health maximizes the revenues it receives from private insurance providers by avoiding contractual relations with them and shunning and risk sharing agreements. Instead, they negotiate payments with these institutions on a case by case basis. Because private insurers have a smaller presence in rural areas, they are essentially not interested in penetration of rural clients and thus offer fewer discounts and special promotions to them, which results in higher reimbursement for hospitals. At the same time, CYH cannot offer the same level of equipment and specialized care as urban hospitals, leading it to lose potential patients. It also lacks teaching and research facilities, which are common to urban hospitals.

In the past several years, new types of competitors have been entering Community Health's markets and decreasing patient volume: physician-owned hospitals and stand alone surgery and diagnostic centers. New technologies have made it possible for physicians to perform procedures that earlier had to be done in a hospital. Community Health is addressing this challenge by attempting to partner with physicians and other independent facilities.



References

  1. CYH 2009 10-K "Overview of Our Company"
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