Three hospital groups have offered to purchase Cape Coral (Fla.) Hospital, a highly desirable 201-bed not-for-profit facility in fast-growing Lee County.
The problem for two of the hospital groups, however, is that Cape Coral already has signed a letter of intent to exclusively negotiate with Lee Memorial Hospital, a 602-bed public hospital located in nearby Fort Myers, Fla.
One day after Cape Coral signed a letter of intent on March 17 with Lee Memorial, Columbia/HCA Healthcare Corp. made an offer to acquire Cape Coral.
Then last week, Health Management Associates, based in Naples, Fla., jumped into the contest with its acquisition offer, said J. Michael Ward, Cape Coral's president and chief executive officer.
Columbia offered to pay off Cape Coral's $130 million debt, assume ownership of its $175 million in assets and give $20 million to the not-for-profit hospital's foundation, said William Hussey, president of Columbia's West Florida division.
HMA offered to give Cape Coral $30 million and assume its debt and liabilities, Mr. Ward said.
Lee Memorial's offer included assumption of debt and assets and didn't include cash, said James R. Nathan, Lee Memorial's president and CEO. In exchange, the Cape Coral board would maintain community oversight over the facility, he said.
In response to the two unsolicited offers, Cape Coral's board voted on March 21 to request that Lee Memorial release it from its exclusivity agreement, which expires on April 30, Mr. Ward said.
"The board felt it was its community responsibility to consider the new developments," said Mr. Ward, who said he still favors forming a network with Lee Memorial.
Mr. Nathan said he would recommend against releasing Cape Coral from its agreement. "Columbia would think it was a major victory if they could muddy up the water and delay it (the deal)," he said.
Under the letter of intent, Mr. Nathan would remain president of the two-hospital network and related healthcare organizations, and Mr. Ward would become executive vice president in charge of hospital operations.
Mr. Nathan said Lee Memorial's board was scheduled to meet March 25 and was expected to consider the final agreement. Pending Lee's decision either to release Cape Coral or approve the final agreement, Cape Coral's board will meet shortly thereafter to consider its options, Mr. Ward said.
Industry experts estimate Columbia would control about 46% of the admissions in the Lee County market if it acquired Cape Coral. However, Lee Memorial would stand to control 67% of the market.
There are five hospitals in Lee County. Lee Memorial is a public hospital and Cape Coral is a community hospital. Columbia owns two for-profit hospitals in the county. The fifth hospital, 88-bed East Pointe Hospital, is owned by HealthTrust-The Hospital Co.
In late 1992, Cape Coral rejected Columbia's acquisition offer, citing philosophical differences, Mr. Ward said. Meanwhile, Columbia plans to build a $10 million outpatient facility near Cape Coral, Mr. Hussey said.
Last year, Columbia won a hotly contested managed-care contract-beating out Lee Memorial, Cape Coral and several other area not-for-profit hospitals-to provide healthcare services to Lee County government employees (Nov. 1, 1993, p. 3).