As a record-breaking government shutdown likely nears its end, executives at for-profit hospital chain Community Health Systems are downplaying the detrimental impact expiring Affordable Care Act (ACA) subsidies and other policy headwinds will have on their business.
Speaking Tuesday morning at the 2025 UBS Global Healthcare Conference, President and interim CEO Kevin Hammons made a point to note that ACA exchanges represent less than 5% of the company’s net revenue.
Not all of those patients would be eligible for the expiring enhanced premium subsidies, he continued, and those who would be subsidized are less likely to send copays and deductibles CHS’ way.
“So we’re already kind of absorbing that piece—and they’re also higher utilizers of emergency room visits,” he said. “So I think our exposure is pretty limited. I think we have less exposure than some of the other providers, and that’s probably more of a geographic issue than anything.”
Hammons, speaking broadly about the year, said CHS had faced some volume disruption during the second quarter due to poor consumer confidence, which appears to have stabilized in the third quarter. Some of that weakness was within CHS’ surgical volumes, particularly elective outpatient procedures among money-minded commercial patients, and is expected to remain soft through at least the end of the year, he said.
Such deferred care could come back in early 2026, Hammons said. With no deal on the ACA subsidies, he said there’s also “a real possibility” that enrollees facing prohibitive premiums for next year could rush to book procedures before the end of the year.
“That said, we haven’t really seen that yet, at least kind of through the third quarter,” Hammons said.
Should there be an eleventh-hour deal in the works, potentially from a December vote promised to the moderate Democrats who crossed the aisle, the executive said CHS has the systems in place to help patients re-enroll in an exchange plan or other coverage support.
“We have a group called Eligibility Screening Services—actually a subsidiary that we own—that we work with our patients as they present to the hospital [or] as they schedule appointments,” Hammons explained. “If they don’t have insurance, our ESS group will work with them to make sure that they get signed up or qualify, whether it’s a charity program, Medicaid, health exchange, any type of service out there.”
As for the shutdown itself, Hammons said there should be no material impact to CHS’ fourth-quarter performance as the Centers for Medicare & Medicaid Services continued to pay out its claims.
Applications for Medicaid state directed payment programs (which played a major role in the third quarter’s revenue beat) “certainly … did not get approved over the last 40 days during the shutdown,” though Hammons said “there’s opportunity” for the held up supplemental payments from Georgia ($10 million to $15 million), Florida (a “relatively small” amount) and Indiana (“no way” to size due to federal and state back-and-forth) to be approved before the year’s end and be recognized in the fourth quarter.
On a longer-term basis, Hammons said CHS is looking into securing more supplemental payments from Alabama, Arkansas and other states, though probably through a mechanism other than provider tax programs due to changes under the One Big Beautiful Bill. That legislation’s work requirements should also herald state-level changes in coverage dynamics, particularly in expansion states, though CHS doesn’t expect any material impacts to Medicaid reimbursement based on its prior experiences when the requirements were implemented in Arkansas and Georgia.
“Those tend to be healthier people that aren’t utilizing hospital services that much,” Hammons explained.
Divestments, deleveraging and growth
The fireside chat also touched on CHS’ recent string of divestments: three hospitals in Pennsylvania for a total purchase price of roughly $35 million (plus some lease liabilities that bring the valuation near $50 million), a $600 million majority stake in a Clarksville, Tennessee, hospital and a roughly $190 million sale of outreach lab services. That, together, should bring CHS nearly $1 billion in cash (minus about 15% to 20% in taxes) when the deals close sometime during the first quarter.
CHS is still getting interest for some assets “that we have no interest in selling … at some pretty good multiples,” Hammons noted. It will consider those on a case-by-case basis and as the environment changes, he said, but there are currently no more deals expected in the near term.
As for the new funds and CHS’ recent declaration of sustainable positive cash flow, the company’s priority is to deleverage its books. The company entered 2025 at 7.4x levered, has hit 6.7x at the end of the second quarter and is aiming to reach “mid 5x in the next few years,” Hammons said.
Longer term, CHS’ growth strategy focuses on “quality physician-patient experience … building that reputation in our markets, being the provider that is capturing more market share,” Hammons said. “Market share is really one of the key building blocks of that growth algorithm as we go into the future.”