Columbia/HCA Healthcare Corp. looks pretty strong with $17.7 billion in 1995 revenues, but it's actually even larger.
The hospital giant now has $1 billion in off-balance-sheet revenues for joint ventures in which it's a 50% partner. If Columbia doesn't control the partnership, the Securities and Exchange Commission requires that it account for those hospitals as investment income.
Two of Columbia's biggest deals last year were 50-50 ones: HealthOne, a six-hospital system in Denver, and Sisters of Charity of St. Augustine Health System, a four-hospital Roman Catholic system based in Cleveland. Both deals were completed last November.
For example, those two systems accounted for $15 million in profits to Columbia during the fourth quarter of 1995. Revenues weren't disclosed.
The amount of off-balance-sheet revenues likely will grow as many tax-exempt systems seem more willing to enter joint ventures with Columbia rather than sell out entirely.
"As the Catholic hospitals see Columbia as a joint-venture partner, they'll want to have deals where Rick (Scott, Columbia's president and chief executive officer) and the pope have an equal vote," said John Runningen, healthcare analyst for Robinson-Humphrey, an Atlanta-based investment banking firm.
Columbia has 19 hospitals with 4,455 beds that are considered "nonconsolidating" because the investor-owned company owns 50%, not enough to count as a controlling partner. The HealthOne deal accounts for 10 hospitals because Columbia contributed four hospitals to the deal.
The other hospitals are located in Austin, Texas; Charlotte, N.C.; Longwood, Fla.; Lafayette, La.; and Raleigh, N.C.
In contrast, Columbia had just two hospitals that were "nonconsolidating" in 1994.