Despite a union attempt to block their vote, Vencor and Hillhaven Corp. stockholders approved the mega-merger the companies announced in April.
Louisville, Ky.-based Vencor will acquire Hillhaven for $1.4 billion in stock, assuming $580 million in debt. The deal closed last Thursday, forming a company with total revenues of $2.1 billion.
The day before the Sept. 27 shareholders' vote, a federal judge denied a request to stop it made by the Service Employees International Union. The union filed the suit Sept. 7 in a Tacoma, Wash., federal court.
In a statement, Hillhaven called the denial "another victory over the (SEIU)." The Tacoma-based nursing home chain and other long-term-care providers have recently been the target of an SEIU campaign criticizing the quality of care and working conditions in their nursing homes.
In its request, the union cited concerns that Hillhaven misrepresented the scope of its subacute services in statements filed with the Securities and Exchange Commission, said Dave Snapp, SEIU nursing home program director.
The SEIU holds that Hillhaven defines subacute care too broadly and overstates the number of its facilities that provide such services. It also asserts that Hillhaven facilities lack the resources to provide adequate subacute care to patients transferred from acute-care hospitals.
Tim Carroll, Hillhaven's vice president for investor relations, said: "The union's initiative is not about the quality of care that Hillhaven offers or the pay and benefit packages that we offer to employees that are represented by the union. In all these Mergers
cases, it's about expanding their union representation." About 9% of Hillhaven's 50,000 employees are unionized, Carroll said.
Last week the SEIU organized a demonstration at the San Francisco headquarters of PacifiCare, in hopes the HMO would stop sending patients to Hillhaven facilities, SEIU spokeswoman Lisa Hubbard said.
In addition, on Sept. 18, SEIU workers went on strike in nine Hillhaven facilities in California, citing contract and patient-care issues (Sept. 25, p. 12).
At the combined company, which will keep Vencor's name, W. Bruce Lunsford will remain chairman, chief executive officer and president. Bruce L. Busby, chairman and CEO at Hillhaven, will be CEO of the firm's new nursing center division.
"The resources of Vencor clearly position us to be not just the nation's largest provider of long-term healthcare, but also the first complete network of facilities for managing the care of patients from long-term hospitalization through skilled-nursing care," Lunsford and Busby said in a joint statement.
Vencor provides respiratory therapy services to more than 1,200 nursing facilities and operates 35 long-term, intensive-care hospitals. Hillhaven runs 389 nursing centers, retirement housing communities and pharmacy outlets in 36 states.