Community Health 'best equipped' to take on Tenet, bond analyst says

Community Health Systems Inc. is "probably the best equipped" company to take over and run Tenet Healthcare Corp., according to Gimme Credit LLC, a corporate bond research firm.

In a report Monday, Gimme Credit analyst Vicki Bryan noted Tenet's decade of below-average performance. While Tenet's earnings before interest, taxes, depreciation and amortization margin is 10.8 percent -- it's best in years -- that's still 30 percent below its hospital peers, Bryant writes.

In contrast, Community Health has been clicking along since its 2007 acquisition of Triad Healthcare Corp. for $6.4 billion.

"We have known it for years as a smart buyer and seller with a knack for improving the profitability and investment return on aquired assets," Bryant writes.

That said, Tenet doesn't want to be bought, having rejected Community Health's $7.3 billion offer last week.

Tenet owns Hahnemann University Hospital and St. Christopher's Hospital for Children in Philadelphia. Community Health owns Chestnut Hill Hospital in Philadelphia as well as Brandywine Hospital, Jennersville Hospital, Phoenixville Hospital and Pottstown Memorial Medical Center in the suburbs.

Gimme Credit estimates that Community Health could generate savings of $150 million to $185 million from Tenet's corporate overhead costs alone.

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