On Monday, April 20th, Shannon Health Systems CEO Shane Plymell sent out a newsletter that began with, "We have important news to share with you today regarding healthcare in your community. "The Trustees of Shannon West Texas Memorial Hospital have signed an agreement to acquire the assets of San Angelo Community Medical Center (SACMC) from Community Health Systems (CHS)."
In the newsletter Plymell mentioned how the decision came about, "The decision was made after the Shannon Board of Trustees invested significant time to understand the needs of the community."
According to an article on the Nashville Business Journal website, "CHS is Nashville’s second-largest publicly traded health care company, with $13.2 billion of revenue in 2019. The company has closed, sold or agreed to sell more than 90 hospitals since 2017 to pay off debt incurred as a result of its $7.6 billion purchase of Florida-based Health Management Associates in 2014."
Shannon has enjoyed prosperity and steady success over the last few decades and have been steadily building new facilities, upgrading older facilities and opening new clinics and imaging centers around San Angelo and other towns throughout the area.
SACMC is a 171 bed facility, compared to Shannon’s 400 beds. According to the American Hospital Directory (AHD), in 2018 Shannon had patient revenue of $1,215,888,379 and a 4-star rating. During that same time period, SACMC reported revenue of $801,720,451 and a 3-star rating. The merger of the 2 facilities could bring in patient revenue of over $2 billion for Shannon Health Systems. The AHD website also showed that in 2018 SACMC had 4,151 total discharges to go along with 17,362 patient days while Shannon had 13,409 discharges and 58,353 patient days.
In his newsletter Plymell pointed out the challenges of today’s healthcare, "This is monumental news because healthcare delivery and reimbursement are changing at an unprecedented rate across the nation and many communities are seeing their hospitals close as they struggle to navigate historic financial, regulatory and operational challenges. Since 2010, 20 rural Texas hospitals have closed – more than any other state. And experts believe more hospitals in our state are at-risk of closure."
According to an article by Jen Guadarrama in the San Angelo Standard Times, the merger would not have been allowed prior to 2019 due to state law, "Changes to Texas state law last year opened a pathway allowing the merger of San Angelo’s hospitals." The article also states, "In January, neither Shannon Medical Center nor Community Health Systems publicly stated any intention to merge." The article goes on to say that Rep. Drew Darby stated that he ‘was not aware of any (agreement)’ related to mergers but introduced the legislation in spring 2019 to protect patients should a consolidation occur." The article says that mergers are allowed if they meet certain criteria; If they can demonstrate a positive impact on the community’ and improved quality, efficiency and care.
In his newsletter on Monday Plymell commented on the benefits of the merger, "This decision keeps up ahead of the curve as we focus on our vision to be the trusted healthcare provider in west Texas. By coming together as one, we have the opportunity to:
Keep healthcare decision-making in our local community.
Be better positioned to recruit and retain the very best talent, including more primary care physicians, specialists and other caregivers.
Reinvest every dollar we make into meeting our community’s unique health needs and challenges.
Make an even bigger impact in addressing the most significant health issues facing our region including heart disease, diabetes, and cancer."
Plymell went on to list several other benefits of the merger of the two hospitals in his newsletter.
CHS and Shannon will apply for a Certificate of Public Advantage as part of a new regulatory structure in Texas that involves a review and approval of the deal by the Texas Health and Human Services Commission, according to the release. A Certificate of Public Advantage (COPA) is a tool used by states to permit and oversee hospital mergers that create monopoly powers. The process is expected to conclude by the end of the third quarter.