Community Health Systems is reshaping itself around a smaller, more concentrated hospital portfolio.
It’s doing so while betting that outpatient growth and commercial-mix gains will carry it forward.
The Franklin, Tennessee-based hospital operator – which also owns and operates ambulatory surgery centers (ASCs) – has spent much of the past several years selling off standalone facilities and managing its debt.
Now, executives say that Community Health Systems’ pruning phase is largely complete. What remains is a tighter network of hospitals designed to anchor surrounding access points, including freestanding emergency departments, clinics and ASCs.
“We are getting, I would say, closer to the end of our programmatic divestitures,” CEO Kevin Hammons said during the company’s fourth-quarter earnings call on Feb. 19. “We’re very comfortable with our portfolio as it stands, and we really want to be just opportunistic about transacting hospitals.”
As Community Health Systems trims hospitals that “stand on their own” and doubles down on regional networks, it is layering in outpatient capacity in core markets.
The company has been adding beds and other sites of care even as it shrinks its overall footprint, Hammons noted.
“I think over the last maybe three to four years, we’ve added 500 to 600 beds to our core portfolio,” he said. “We’re adding freestanding EDs, surgery centers, clinics, and we would continue to be looking at opportunities to do that.”
The portfolio reset comes as Community Health Systems braces for potential turbulence in payer mix.
During the recent earnings call, executives flagged uncertainty tied to the health insurance exchanges, warning that administrative reforms and the expiration of enhanced premium tax credits could reduce enrollment in 2026.
“As a reminder, health care exchanges represent less than 5% of our total adjusted admissions and net revenue,” CFO Jason Johnson said.
Still, the company built a potential $20 million to $30 million EBITDA headwind into its guidance to account for possible enrollment declines.
At the same time, Community Health Systems expects commercial volumes to strengthen. When asked which payer categories could drive improvement in 2026, Hammons pointed to commercial coverage.
“Certainly, commercial,” he said, noting the company has already seen some improvement in commercial mix and expects service line investments to capture additional business.
In terms of financial highlights, Community Health Systems is entering 2026 in a more stable position. The company turned free-cash-flow positive in 2025 and reduced leverage from 7.4 times at year-end 2024 to 6.6 times at year-end 2025, aided by divestitures and debt redemptions. Additional asset sales are expected to further reduce net debt this year.
Meanwhile, executives highlighted what they described as the strongest Medicare rate increase in recent memory.
“About a 4% Medicare rate increase for 2026. That’s the highest rate we’ve seen, or the highest increase we’ve seen in Medicare, as long as I can remember,” Hammons said.
For the three-month period ended Dec. 31, 2025, Community Health Systems reported operating revenues of about $3.12 billion.
On a same-store basis, both admissions and adjusted admissions decreased 0.3%, compared to the same period in 2024.
