County hospitals, often cast as the bureaucratic messes of the healthcare industry, ironically are becoming hot acquisitions and lease targets in North and South Carolina for several national for-profit hospital chains.
At least three county hospitals have received unsolicited buyout or lease offers in recent weeks from investor-owned chains including Columbia/HCA Healthcare Corp., Tenet Healthcare Corp. and Universal Health Services.
The chains' targets in South Carolina are 286-bed Regional Medical Center of Orangeburg (S.C.) and Calhoun Counties and 203-bed Laurens County Healthcare System in Clinton, S.C. The sought-after facility in North Carolina is 644-bed Wake Medical Center in Raleigh.
In South Carolina, Regional Medical Center's board met with the county councils from Orangeburg and Calhoun counties on Sept. 10 to discuss "inquiries" about a possible hospital sale.
The inquiries came from Columbia, Tenet, Universal and a fourth chain, said Regional Medical Center spokesman Kevin Callahan. He said he didn't have information about the fourth suitor.
In a statement, Regional Medical Center President Thomas Dandridge described the Sept. 10 meeting as "an educational session" and said the three boards made no decision about selling the facility. Another such session will be held in October.
"No offers or discussions will be had with potential purchasers, if at all, until further information is developed from consultants and advisers," Dandridge said.
In Clinton, Universal has offered to acquire the Laurens County system, according to a source who requested anonymity. System executives didn't return several phone calls.
But Kirk Gorman, Universal's senior vice president and chief financial officer, confirmed the King of Prussia, Pa.-based chain has made offers for both Laurens County and Regional Medical Center. Gorman said the company is talking to other county hospitals in the Carolinas, but he declined to identify them.
Gorman said Universal and other chains are attracted to county facilities in the Carolinas because they generally provide high-quality care and are in good financial shape. Such hospitals are acquisition targets because they offer the chains opportunities to come in and implement efficiencies at the hospitals without doing anything drastic to make them more successful.
"They're doing well enough to be of interest," he said. "Most of us are not interested in turnaround properties."
Regional Medical Center earned $7.9 million in 1994 on total revenues of about $78 million, according to the latest available figures from HCIA, a Baltimore-based healthcare information company. Laurens County, meanwhile, earned $1.4 million that year on total revenues of $23.1 million, HCIA said.
Gorman said the fact that the hospitals are county-owned is coincidental.
"It's not any easier to negotiate with a county hospital than a private not-for-profit, and in some ways it's more complex because you have to deal with the political realities facing the owners," Gorman said.
Meanwhile, in North Carolina, Tenet threw a monkey wrench into the privatization plans of Wake Medical Center.
After months of study, Wake County commissioners passed a motion in early August to convert Wake Medical Center to a private, not-for-profit facility. It appointed a 10-member, joint hospital-county task force to develop a plan to implement the conversion, and it appointed a 17-member task force to study the conversion's impact on care to the county's poor.
On Aug. 26, however, hospital representatives on the conversion task force stopped negotiating with the county after they learned that county officials agreed to hear a lease offer from Tenet.
Wake Medical earned $15.5 million on total revenues of about $263 million in 1995, according to HCIA.
In a written statement, Ray Champ, Wake Medical's president, said: "We entered these negotiations after the county voted to endorse Wake Med as a citizen-controlled, not-for-profit hospital. If the county is courting offers from other companies to lease the hospital, then they are opening the floodgates to any company that wants to make an offer on Wake Med. Leasing the hospital is not our goal."
But hospital and county officials then essentially agreed to disagree and subsequently began working on parallel tracks, said Wake Medical spokeswoman Michelle Mastri.
Hospital executives resumed their work on a conversion plan and were scheduled to meet with county officials late last week. The county, in turn, began to entertain outside offers, including one from Tenet.
Jim Lathren, director of health systems development for Tenet's southeast region, confirmed that the company would be submitting a formal long-term lease proposal to Wake County by mid-October.
"This is another option for the commissioners to consider," Lathren said. "It's a viable option worthy of consideration. We can bring a lot to the table and would like to be heard."