Columbia/HCA Healthcare Corp. completed its largest physician syndication deal yet last week, raising $30 million from 450 physicians seeking an equity interest in its Fort Lauderdale, Fla.-area healthcare network.
Physician ownership has been a cornerstone of the Columbia strategy. The 193-hospital chain, created through the merger with Hospital Corporation of America last month, is expected to use the same strategy in urban markets where it develops systems.
It previously allowed physician investment in its networks in other markets, such as Houston and El Paso, Texas. There, physicians can buy an equity interest in Columbia's hospital systems, which frequently also include outpatient and home healthcare businesses. Columbia/HCA executives believe its systems work more efficiently and cost-effectively when physicians are financial partners in the effort.
"By far, this was the most successful," said Dan Moen, Columbia/HCA's Florida group president, noting that Columbia executives had expected to raise $16 million, or about half of the total. Physicians now own 20% of the Columbia system in Broward County.
The syndication included five Columbia hospitals, one home healthcare agency, one surgery center and one psychiatric hospital. However, that system already has been expanded to include Northwest Regional Hospital, a former HCA facility.
Because the syndication began before the Columbia/HCA merger was completed last month, Northwest Regional wasn't part of the original syndication. A supplemental offering will be made to physicians who practice at that hospital, and Mr. Moen said he expects another 50 to 100 physicians to buy equity interests.
Mr. Moen noted that Broward County is one of 12 community health purchasing alliance regions under Florida's new managed competition system. Columbia/HCA intends to be a major provider to health plans in the alliance region, he added.
Columbia/HCA intends to do a similar syndication of physicians in central Florida, where it has four hospitals, including 339-bed Winter Park Memorial Hospital. Columbia acquired a 50% interest in Winter Park last week. The central Florida system also will include seven surgery centers owned by Medical Care America, a Dallas-based system with which Columbia/HCA is affiliated.
Mr. Moen last week also was promoted to be one of five group presidents for the newly merged Columbia/HCA (See related story, this page). The appointments were announced in conjunction with Columbia/HCA's fourth-quarter and year-end earnings.
The company's earnings were higher than analysts' expectations, buoying its stock price 5.2% to $43 on Feb. 28 in trading on the New York Stock Exchange.
The company reported an 18% increase in profits from continuing operations to $176 million, or 52 cents per share, for the fourth quarter ended Dec. 31, 1993, compared with $149 million, or 44 cents per share, in the year-ago period. Revenues rose 4% to $2.6 billion. The results were the first to include the former Galen hospitals.
For the year, Columbia/HCA reported net income of $673 million, or $1.99 per share, from continuing operations, compared with $597 million, or $1.82 cents per share, in the previous year. Revenues grew 3% to $10.2 billion.