Columbia/HCA Healthcare Corp. beat out a bid by 691-bed Sarasota (Fla.) Memorial Hospital last month to acquire 168-bed Doctors Hospital of Sarasota, giving the investor-owned chain a string of 14 hospitals along Florida's west coast from Tampa to Fort Myers.
To combat Columbia's west Florida network, Sarasota Memorial is looking to merge or affiliate with neighboring Venice (Fla.) Hospital.
Financial details of the Doctors Hospital acquisition, which is expected to close by May 1, were unavailable.However, Michael Covert, Sarasota Memorial's president and chief executive officer, said Columbia's offer was less than the $25 million the public hospital had offered.
Executives of Doctors Hospital couldn't be reached for comment on why they accepted Columbia's offer.
Columbia, through its merger with HCA-Hospital Corporation of America, already owned a 25% interest in the hospital. The remaining 75% of for-profit Doctors is owned by a limited partnership of physicians and investors headed by Sarasota attorney John Meshad.
"Sarasota is almost dead center for (Columbia's west Florida) division," said William Hussey, Columbia's west Florida division president. "It was the missing link and important for us from a managed-care contracting standpoint."
Sarasota Memorial also was interested in acquiring Doctors Hospital for similar reasons, Mr. Covert said. But Mr. Covert contended Sarasota County residents could have saved as much as $17 million a year in healthcare costs if the public hospital had acquired its competitor. Part of the savings could have come from the hospital's plans to reduce charges at Doctors to bring them in line with Sarasota Memorial's, he said.
"Doctors' charges are about $1,000 more (per patient) per day than ours," Mr. Covert said. "We don't think that will change with Columbia coming in."
While Mr. Hussey said Columbia also plans to become more efficient and hold down patient costs, he didn't say whether Columbia would reduce Doctors' charges.
"Our experience is that we save substantial amounts of dollars when we compete for managed-care contracts," he said. "We will offer good competition for Sarasota and Venice hospitals."
The deal also calls for Columbia to complete construction of a new Doctors Hospital, which will be located in east Sarasota County. The new facility, expected to open this fall, will offer obstetrics and pediatric services, which the current facility doesn't have, Mr. Hussey said.
With Columbia acquiring Doctors, talks between Sarasota Memorial and Venice Hospital on merger or affiliation are proceeding with even greater interest, Mr. Covert said.
The two hospitals began a review of collaborative options last fall, but it wasn't until earlier this month when both boards heard specific options, Mr. Covert said.
The main issue involves how to bring together a public hospital and a private, not-for-profit facility, Mr. Covert said. Sarasota Memorial, which was created in 1949, is a tax-district hospital with publicly elected board members. Venice Hospital is a private, not-for-profit institution that has a self-perpetuating community-based board.
Options range from full merger, under which Venice would convert into a public hospital, to an affiliation. Under one affiliation option, a public holding company would be formed where Venice could remain a private, not-for-profit hospital and Sarasota Memorial would remain a tax-district hospital, Mr. Covert said.
"With the Columbia network emerging, the boards feel some action is needed by this summer, but a lot depends on what option we pursue," Mr. Covert said.