When American Medical International completes its acquisition of St. Francis Hospital in Memphis, Tenn., this spring, not only will AMI operate the largest for-profit hospital in town, it may become one of the city's leading providers of subacute care, MODERN HEALTHCARE has learned.
The Dallas-based chain signed a letter of intent to acquire 587-bed St. Francis earlier this month (Jan. 17, p. 16). Included in the deal are a 197-bed nursing home, two medical office buildings and a family practice residency center, all owned by St. Francis.
However, not disclosed as part of the transaction is a pending certificate-of-need application filed by St. Francis on Oct. 5. The hospital wants to convert 42 of its 693 licensed beds to subacute-care beds at a cost of $344,000. The hospital, which currently has no subacute-care beds, intends to pay cash.
Subacute care, which targets patients not sick enough to stay in the hospital but not ready to go home, is one of the fastest-growing and most lucrative segments of the industry (Dec. 13, 1993, p. 34).
It's not known how many subacute-care beds are in operation in Memphis. St. Francis executives declined to return repeated phone calls as did executives at Methodist Hospitals of Memphis, which had been courting St. Francis as a possible merger partner. In fact, Methodist previously said it expected to reach a tentative agreement with St. Francis about a future agreement in December (Nov. 15, 1993, p. 6).
State records indicate that on Aug. 25-just 41 days before St. Francis filed its CON application-Tennessee rejected a CON application from 243-bed Eastwood Medical Center, which sought to convert 10 of its beds into a subacute-care unit at a cost of $70,000. Currently, Eastwood is the only for-profit hospital in Memphis.
Meanwhile, Margo Barnes, an AMI spokeswoman, said that if the application is granted before AMI buys the hospital, the CON will become part of the transaction, and AMI will continue with plans to open the 42-bed unit. If the sale is completed before the CON is granted, AMI will take over the pending application and continue to seek state approval, she said.