New CHS initiative will drive 'significant cost savings,' CFO says

Franklin, Tenn.-based Community Health Systems recently kicked off its Project Empower initiative, which combines the Oracle Health Enterprise Resource Planning system with other financial, supply chain and human capital management systems offered by the tech company, CHS CFO Kevin Hammons told Becker's.

The initiative is designed to reduce costs and boost revenue by improving efficiencies and eradicating disparate technology systems across CHS as it continues to improve its operating margin and pay off debt, which stands at about $1.5 billion, according to Mr. Hammons. More than half of CHS hospitals currently use Cerner clinical platforms.

"Project Empower is redesigning a lot of our workflows, particularly for administrative and back-office functions, such as pharmacy and supply chain," Mr. Hammons said. "An integrative system with Oracle will help manage those functions and move a lot of them into a shared service environment through which we will be able to gain a lot of efficiencies."

The systemwide modernization and optimization initiative, which is anticipated to be completed by the end of 2024, will provide better access to and management of large-scale data as well as accelerate decision-making processes across the health system. 

"We just kicked off our first go-live site with this and are deploying it across our hospitals over the next 12 months or so," Mr. Hammons said. "By the end of 2024, we'll be done. We're very excited about the prospects of this and think it'll be a big win for the company as we continue to move forward."

Fifteen hospitals and CHS' corporate office have implemented Oracle so far. Shared business operations have also launched with no disruptions to patient care, a spokesperson for the system confirmed with Becker's.

During CHS' third-quarter earnings call, Mr. Hammons said the system is "increasingly confident" in the business case for Project Empower and "believe that the significantly improved visibility and insights will reveal opportunities within CHS's markets and business lines from which our operators can capitalize upon to drive further shareholder value."

Project Empower also directly ties into CHS' strategic financial priorities for 2024, which can be broken down into three buckets: to improve operating margin/EBITDA margin, improve free cash flow and reduce debt leverage.

"We're focused on long-term sustainability and reducing our debt leverage and getting our balance sheet on more solid footing," Mr. Hammons said. "We've made significant progress in recent years, taking our debt down to about $1.5 billion and extending our maturity to give ourselves more flexibility."

CHS has sold 11 hospitals in 2023 as it extended its divestiture plan to help control its losses and reduce debt. 

Continuing to improve its margins and reduce leverage will better position CHS to get through any other unforeseen challenges, such as the COVID-19 pandemic. Mr. Hammons said CHS "is making a lot of progress" here and expects the company to be "back acquiring hospitals" in the not too distant future if there are opportunities that make sense. 

Copyright © 2024 Becker's Healthcare. All Rights Reserved. Privacy Policy. Cookie Policy. Linking and Reprinting Policy.

 

Featured Whitepapers

Featured Webinars