MileStone Healthcare's management-led buyout from Columbia/HCA Healthcare Corp. has been completed. Terms weren't disclosed, but the buyout was financed through Morgan Stanley Venture Partners, New York. Dallas-based MileStone is a contract management firm that operates physical rehabilitation, subacute/skilled-nursing and outpatient rehabilitation units for hospitals. The company has 120 contracts in 12 states and annual revenues of $25 million. "The company's growth has far surpassed its original business plan," said Scott Halsted, vice president of Morgan Stanley. MileStone was founded as a subsidiary of Epic Healthcare Group, a hospital chain that was purchased by Healthtrust in 1994. When Healthtrust merged with Columbia earlier this year, the Nashville, Tenn.-based hospital chain said it intended to sell Healthtrust's two "stone" subsidiaries (Jan. 30, p. 4). Cornerstone Health Management, a contract management firm that specializes in geriatric services, was sold to Atlanta-based GranCare earlier this year.
Quorum Health Group has received a $600 million revolving line of credit from a group of 15 banks, double its previous line. The Brentwood, Tenn.-based hospital chain's expanded line of credit includes a lower interest rate and greater latitude in financial covenants. Quorum has $460 million available under the line of credit, which is for five years with an option to extend it two more years.
The University of Texas Southwestern Medical Center is deriving an increasing amount of its revenues from licensing royalties. The amount of royalties from licensed technologies doubled to $2.7 million in 1994. The number of new inventions reported rose to 43 in 1994 from 40 in the previous year, and the number of patents issued to researchers working at UT Southwestern totaled 12, one more than in 1993, officials said. "Without proper management, important new advances are often commercialized by industry without financially recognizing the input of university-based investigators, which hurts the investigator and the university," said William Neaves, M.D., the medical school's dean. A significant contributor to the 1994 royalties was a three-dimensional heart-imaging software developed in the medical center's radiology department.
National Data Corp., an Atlanta-based provider of high-volume transaction processing services to the healthcare and retail-merchant markets, has filed with the Securities and Exchange Commission for a public offering of 2.75 million shares of common stock. Proceeds will go toward working capital and general corporate purposes, including acquisitions, said Robert Yellowlees, the company's chairman and chief executive officer. Goldman, Sachs & Co. and Salomon Brothers, both New York-based investment banking firms, will underwrite the offering.
Standard & Poor's Corp. revised its credit outlook for the Health Insurance Plan of Greater New York to "negative" from "stable." The move was prompted by recent enrollment declines and constraints on earnings. In 1994 enrollment in the New York-based HMO declined 4% to 913,500, and its profit margin slipped to 1% from an average of 1.5% in the previous four years. Standard & Poor's said a downgrade could occur in the next one to three years if HIP's profitability, enrollment and market-share declines continue unabated. HIP has an A-1+ rating on $56.3 million in debt with an AAA guarantee provided through a letter of credit from Morgan Guaranty Trust Company of New York. It also has an A- rating on $75 million in bonds and an A-1 on $50 million in commercial paper. Separately, Standard & Poor's lifted the rating of another HMO, Harvard Community Health Plan, to A from A-, affecting $108.7 million in outstanding debt. The Brookline, Mass.-based HMO's dominant market position, recent merger with Pilgrim Health Care in Norwell, Mass., and consistent business and financial growth contributed to the upgrade, the rating agency said.