Columbia/HCA Healthcare Corp. said the U.S. Tax Court has ruled in Columbia's favor in a dispute in which the Internal Revenue Service claimed the company owed $614 million in back taxes and related interest. The dispute stemmed from accounting methodology used by Hospital Corporation of America in the 1980s prior to its merger with Columbia. Executives said the favorable ruling wouldn't have a material effect on its earnings. Still pending with the court is a dispute over $446 million in income taxes and interest, also stemming from HCA's tax returns during the 1980s.
Tenet Healthcare Corp. has signed a new agreement with its banks that lowers the hospital chain's cost of borrowing and releases some restrictions in its former pact. The agreement prompted Standard & Poor's Corp., a New York-based credit-rating agency, to place Tenet's $800 million in senior unsecured debt on CreditWatch with positive implications. Under the new pact, Tenet will borrow from a five-year, $1.6 billion unsecured credit facility. It replaces Tenet's former bank agreement, which was arranged last year when Tenet merged with American Medical International. To finance that acquisition, Tenet secured a $1.8 billion term loan and a $500 million revolving credit line. Since then, the investor-owned chain of 75 hospitals has repaid $800 million under that bank agreement, leaving $1 billion on the term loan.
Woman's Hospital in Baton Rouge, La., has named Teri Fontenot as its new president and chief executive officer. Fontenot, 42, former executive vice president at the 234-bed hospital, assumed the post March 11-just 10 days after Vicki Romero resigned as president and CEO. Romero's departure followed the decision of the hospital's parent corporation to reject a joint venture offer from Columbia/HCA Healthcare Corp. (Feb. 12, p. 28). Romero had supported the deal with Columbia.
The Federal Emergency Management Agency announced it will provide more than $831 million to four Los Angeles-area hospitals to repair or replace facilities damaged by the 1994 Northridge earthquake. The state and the private hospitals themselves will contribute an added $116 million for a total of $947 million. FEMA will give $30.8 million to Cedars-Sinai Medical Center, $373.7 million to LAC University of Southern California Medical Center, more than $294 million to University of California Los Angeles Medical Center and $133.5 million to Saint John's Hospital and Health Center in Santa Monica. The grants settle claims for all those hospitals but UCLA, a FEMA spokeswoman said. UCLA said in a written statement that it's negotiating with FEMA to obtain more funds because the grant formula focused only on acute-care services. UCLA's original claim was for $935 million. FEMA has yet to resolve claims from several other hospitals damaged in the quake, the spokeswoman said.