Baptist Hospital in Nashville, Tenn., has signed letters of intent to acquire two for-profit community hospitals, both within about an hour's drive of the city.
The announcement of the pending sales comes six weeks after Columbia/HCA Healthcare Corp. entered into an agreement to buy two not-for-profit hospitals in the Nashville area.
The transactions are the latest moves in a quick-paced game of chess between Tennessee's not-for-profit hospital sector and Columbia, the nation's largest for-profit hospital chain.
Earlier this year, for example, four of the state's leading not-for-profit hospital systems, including Baptist, formed a statewide alliance called Tennessee Healthcare to compete with Columbia's burgeoning network of hospitals in the state (Jan. 23, p. 22).
The hospitals to be acquired by Baptist are 71-bed DeKalb General Hospital in Smithville, Tenn., about 50 miles east of Nashville, and 52-bed Three Rivers Community Hospital in Waverly, Tenn., about 65 miles west of the city.
"We were pitched by a number of companies, including Columbia and Community Health Systems," said Alan Markowitz, administrator and chief executive officer of DeKalb General. "But we turned to Baptist."
A Baptist statement about the Three Rivers acquisition also indicated the sales agreement followed competing offers for the small hospital.
"We are proud to have been chosen by Three Rivers to help them continue their tradition of providing quality care in the Humphreys County area," said C. David Stringfield, Baptist's president.
DeKalb General and Three Rivers are for-profit facilities owned by local partnerships. Terms of both sales weren't disclosed. The Three Rivers deal is expected to close by the end of May, while the DeKalb General sale is expected to be completed by June 30.
Jim Word, Baptist's senior vice president, said Baptist is purchasing the partnerships that own each facility and intends to operate the hospitals as for-profit subsidiaries of the hospital.
Both hospitals were profitable in 1993, according to the latest available data from the Tennessee health department.
DeKalb General posted a 27.4% profit margin, earning $3.2 million on total revenues of $11.7 million. Three Rivers earned $67,334 on total revenues of $5.3 million, or a 1.3% profit margin.
Not-for-profit Baptist earned $19.4 million on total revenues of $251.1 million in 1993.
The proposed sales come on the heels of Columbia's proposed acquisitions of 176-bed Goodlark Regional Medical Center in Dickson, Tenn., and 29-bed Cheatham Medical Center in Ashland City, Tenn., for $103 million (April 3, p. 8). Both are not-for-profit hospitals.
The sales are pending, said a Columbia spokeswoman.