Health Care Deal News: Spotlight on Hospitals - March 2012

Integris Health is entering into a joint venture with  Health Management Associates (NYSE: HMA) to operate five acute care hospitals in Oklahoma with a combined total of 226 beds. Under terms of the deal, HMA is paying $60.0 million for an 80% ownership interest in the J.V. The price paid implies a purchase price of $75.0 million for a 100% interest in the J.V., or approximately $331,860 per bed. The deal is to be funded from available cash balances and proceeds from sales of available-for-sale securities.

Huntsville Hospital, the largest not-for-profit operator in Alabama, announced two deals in February. First, Huntsville is acquiring Decatur General Hospital, a 242-bed acute care facility in Decatur, Alabama with 64 psychiatric care beds, for $25.0 million in assumed debt. This announcement comes two months after Huntsville acquired Decatur’s other acute care hospital, Parkway Medical Center. Huntsville and Decatur General have had a strategic alliance since 2010.

In its second deal of the month, Huntsville is acquiring the assets of Hartselle Medical Center (HMC), a 150-bed acute care facility in Hartselle, from Capella Health Care for an undisclosed price. This deal will allow Huntsville Hospital to better rationalize resources; Morgan County currently has 300 too many hospital beds for its population. Huntsville may transition Hartselle Medical from an inpatient to an outpatient facility, while keeping its physician network in place.

Merit Health Systems is selling Mountainside Hospital, a 233-bed acute care facility in Montclair, New Jersey, to Montclair Health, a J.V. between LHP Hospital Group of Plano, Texas, and Hackensack University Medical Center. Just last month Merit sold its only other acute care property, 183-bed Nix Health Systems in San Antonio, Texas, to Prospect Medical Holdings. With these two sales, Kentucky-based Merit exits the acute care business.

Restoration Healthcare of Celina, Tennessee is selling Cumberland River Hospital, a 36-bed community hospital serving Clay County, to 247-bed Cookeville Regional Medical Center. This gives Cumberland River Hospital access to the larger system’s financial and managerial resources, which may help it better weather the increasingly challenging financial environment for hospitals.

Solis Healthcare, LLC is selling Roxborough Memorial Hospital, a 140-bed acute care facility and one of Philadelphia’s last stand-alone hospitals, to California’s Prime Healthcare Services. A purchase price has not been disclosed. This acquisition would give Prime Healthcare its first hospital in Pennsylvania (it was recently looking in New Jersey). Tenet Healthcare (NYSE: THC) sold Roxborough Memorial to Solis in August 2007 for $25.5 million; Tenet acquired it in 2003 for $23.0 million.

In Connecticut, the Backus Healthcare System, which includes Backus Hospital, has signed a nonbinding letter of intent to explore an affiliation with Hartford Hospital. In the course of due diligence, the parties will be able to determine whether the affiliation rises to the level of a merger. In neighboring Massachusetts, Cooley Dickinson Hospital of Western Massachusetts in Northampton has announced plans to affiliate with Massachusetts General Hospital in Boston. This is the culmination of a three-year process during which Cooley Dickinson considered seven potential partners.

In something of a rarity, Downey Regional Medical Center in Downey, California, emerged from Chapter 11 bankruptcy reorganization without being sold to another entity. Under its exit financing, it issued $32.0 million in......Want to read more? Click here for a free trial to The Health Care M&A Information Source and download the current issue today