Community Health Systems apparently has the winning bid for 84-bed Marion (Ill.) Memorial Hospital, as investor-owned healthcare firms begin to move into the Midwest.
Officials at the southern Illinois hospital, which is owned by the city of Marion, entertained 15 bids, most from investor-owned firms, before selecting Brentwood, Tenn.-based CHS to take possession of the facility.
"Competition in the development of systems has made them (investor-owned chains) attractive because of their access to market capital," said Richard Livengood, president and chief executive officer at Marion Memorial.
"(CHS has) agreed to help us elevate the level of care in southern Illinois and stop the (patient) migration we've had to places like Cape Girardeau, Mo., and Padu-cah, Ky.," Livengood said.
Terms of the deal weren't disclosed, but officials said CHS has offered to build a new $50 million hospital, which would have 150 beds and handle more severe illnesses and tertiary patient loads.
Marion Memorial posted net income of $383,000 on net revenues of $21.8 million in 1994, the latest year for which financial information was available from HCIA, a Baltimore-based healthcare information company.
The hospital's acute-care admissions have gradually slipped to 2,675 in 1994 from 3,500 in 1992, HCIA figures show.
Other investor-owned firms Marion Memorial looked at included Health Management Associates of Naples, Fla., and Columbia/HCA Healthcare Corp. of Nashville, Tenn., which owns a surgery center in Marion.
CHS' only other Illinois hospital is 49-bed Crossroads Community Hospital in Mount Vernon, Ill.
Of the 212 acute-care hospitals that are members of the Illinois Hospital and HealthSystems Association, fewer than 20 are investor-owned and most of those are in the Chicago area.
There also was pressure to choose a local company.
"There's a lot of local pride down here, so some things aren't as easy to work politically," Livengood said. "These things take time."
Marion entertained local bids, including a proposal to join Carbondale, Ill.-based Southern Illinois Healthcare, which has four hospitals in the southern part of the state.
In the last two years, Marion had talked to nearby ASC Health System in Ruma, Ill., and Southern Illinois about affiliations or network possibilities.
A letter of intent is expected to be signed and the deal should be completed by Aug. 1, executives said. Mayor Robert Butler told the City Council earlier this month that Community's bid was a "beginning step to a final agreement."
CHS owns 38 rural and suburban hospitals in 18 states, primarily in the Southeast. The chain agreed earlier this month to be sold to Forstmann Little & Co. for $1.4 billion.
As part of that deal, Forstmann Little will invest $1 billion of its own capital, and Chase Manhattan will supply $900 million to buy CHS and help it acquire more hospitals.