Brim and Paracelsus Healthcare Corp. last week announced plans to merge their privately held hospital firms into a company that will own and operate 25 hospitals.
Pasadena, Calif.-based Paracelsus will pay cash to Brim's 52 employee shareholders-including five senior managers who own most of the shares-and act as the holding company for the new firm, which will have combined annual revenues of some $700 million. Terms of the deal were not disclosed.
The new company will be led by Ron Messenger, Paracelsus' president and chief executive officer. The deal ends an era for A.E. "Gene" Brim, the CEO of Portland, Ore.-based Brim who founded the company in 1971.
"The healthcare industry is changing dramatically, and we want to concentrate on our respective strengths," Brim said. Paracelsus' strength "is in ownership of hospitals, and we will retain our prominence in management and contract management. This is a strategy to grow and not to restrain costs."
Brim owns four hospitals and has 61 hospital-management contracts, primarily at rural facilities. Paracelsus owns and operates 21 hospitals, most in the Southwest and Southeast.
"The operations of the combined companies will give Paracelsus a larger presence in the 27 states and more than 90 communities currently served by the facilities managed and owned by Brim," Messenger said.
Brim had net income of $4.8 million on net revenues of $119.1 million in 1994, according to MODERN HEALTHCARE's 1995 Multi-unit Providers Survey. The firm had $46.1 million in assets. Paracelsus doesn't disclose its financial information.
Brim will retain its name and headquarters in Portland. The deal, scheduled to close Oct. 1, has to be approved by shareholders of both companies.
The 65-year-old Brim said he has no intention of retiring but will relinquish control of his company's operations and take on a "policymaking role."
"Our alliance with Paracelsus will ensure that Brim has the resources and capital to compete in the ever-increasingly competitive healthcare marketplace," said Brim, who will be vice chairman of the company's five-member board.