Medaphis Corp., an Atlanta-based publicly traded provider of business management and information technology services primarily to the healthcare industry, signed a definitive agreement to acquire Health Data Sciences, a San Bernardino, Calif.-based healthcare information system vendor, in a stock swap valued at $260 million. Medaphis products include systems integration and work-flow engineering systems and services, billing and accounts-receivable processing, and scheduling and information management systems. HDS markets a product line called Ulticare, an integrated information system oriented toward clinical data and cost accounting functions. The agreement called for all the capital stock of HDS to be exchanged for about 6.1 million shares of Medaphis common stock and assumption or issuance by Medaphis of stock options representing an additional 556,000 shares. On May 23, the day before the agreement was announced, Medaphis' stock closed at $39.38 per share.
San Diego-based Sharp HealthCare last week signed a definitive agreement to sell a 50% interest in the not-for-profit system to Columbia/HCA Healthcare Corp. The 50% interest is valued at $400 million. The definitive agreement is the most recent step in a deal between Columbia and Sharp, which controls one-third of the San Diego market. Last December, Sharp agreed to negotiate exclusively with Columbia, but the terms hadn't been determined. Last week, Sharp released those terms, which will be forwarded for review by the state's attorney general. Columbia will pay $195 million in cash and contribute assets of its hospital and surgery center in the San Diego area. Sharp and Columbia will be 50-50 partners in an organization that owns Sharp Memorial Hospital, San Diego; Sharp Cabrillo Hospital, San Diego: Sharp Chula Vista (Calif.) Medical Center; Sharp HealthCare Murrieta (Calif.); Mission Bay Memorial Hospital, San Diego; Sharp Mission Park Medical Group; and Surgicare of Oceanside. Mission Bay Memorial and the surgery center are owned by Columbia. Half the ongoing income generated by the partnership will flow to each partner, but Sharp is guaranteed a minimum distribution of $10 million per year for three years. When the deal is completed, Sharp will have cash and assets of more than $250 million.
A state legislator has sued to block the merger of three South Carolina hospitals, saying it violates the state constitution. Rep. Ralph Davenport (R-Boiling Springs) said the Greenville, S.C., and Spartanburg, S.C., hospital systems, which want to merge with the private Anderson (S.C.) Area Medical Center, are public organizations that under the constitution cannot own or be part of a joint venture. Davenport belongs to a newly formed group of doctors, business representatives, private hospitals and legislators fighting the proposed merger. Joe Oddis, president and chief executive officer of Spartanburg Regional Healthcare System, said the lawsuit was groundless. Greenville Hospital System President Frank Pinckney said the state Supreme Court has approved similar arrangements.
Marshfield (Wis.) Clinic, after defeating most antitrust charges against it, acknowledged partnership discussions with a nearby group practice. Marshfield and 70-physician Wausau (Wis.) Medical Center have signed a letter of intent to evaluate the possibility of Wausau joining the Marshfield system. A full merger is possible, said Gene Oestreich, Wausau's administrator. The letter provides for a 90-day evaluation period, but detailed negotiations could continue through 1996. Wausau is a town of 37,000 people in central Wisconsin, just northwest of Marshfield. Marshfield Clinic was accused of antitrust activities by Blue Cross and Blue Shield United of Wisconsin. A recent refusal by the U.S. Supreme Court to review the case leaves standing a decision that overturned most of a jury award against the clinic. Damages still must be set in one charge that was upheld-that the clinic and its HMO illegally divided markets with competitors (March 25, p. 6).
A Minnesota county will ask not-for-profit providers bidding for its public hospital for $6.4 million more before it accepts a richer offer from a for-profit company. It also wants a promise that the buyer will build a new hospital, said Susan Clark of McGladrey & Pullen, a Minneapolis accounting firm handling the bid for the county. The Itasca County board of commissioners voted 5-0 last week to give the not-for-profits' consortium until May 30 to meet its new terms. The consortium includes Allina Health System, Minneapolis; Benedictine Health System, Duluth; and Duluth Clinic. The for-profit bidder is Champion Healthcare Corp. of Houston. At stake is 73-bed Itasca Medical Center in Grand Rapids, a community in northeast Minnesota. The consortium offer is worth about $9 million, while Champion has offered about $21 million, according to a preliminary evaluation by McGladrey & Pullen (May 6, p. 28). Itasca County wants the consortium to offer an additional $5 million for the building and $1.4 million to cover general obligation bonds, Clark said.