Tenet Healthcare Corp. is on the verge of acquiring 460-bed Georgia Baptist Medical Center in Atlanta for between $200 million and $300 million.
The deal would put Columbia/HCA Healthcare Corp. on notice that Tenet can successfully cut in on the Nashville, Tenn.-based healthcare company's business.
Georgia Baptist pulled the plug on a proposed joint-venture deal with Columbia last year after four months of negotiations (Aug. 21, 1995, p. 17).
Georgia Baptist Health Care System said last week that its governing body has directed it to sign a letter of intent with Santa Barbara, Calif.-based Tenet to sell the medical center and form numerous other joint ventures with the for-profit chain.
Tenet said it expects to sign the letter of intent next month and complete the acquisition in the next four to six months.
Tenet said a final purchase price and structure for the transaction has not yet been determined but that the deal will likely involve paying more than $200 million to Georgia Baptist.
Georgia Baptist's nixed deal with Columbia, which operates 10 hospitals in Georgia, including 294-bed Columbia West Paces Medical Center in Atlanta, had been expected to be patterned after a 50-50 joint venture between Columbia and Southwest Texas Methodist Hospital in San Antonio.
David Harrell, chief executive officer of Georgia Baptist Health Care System, said Tenet's corporate philosophy is a better fit for the medical center.
"Our impression is that Tenet operates on a going-forward basis on operations and is not dependent on acquisitions to sustain its growth," he said. "(Tenet doesn't) have the pressure to have a new acquisition every week. We want to grow the Georgia Baptist Medical Center in a strategic alliance that will end up ensuring our employees a place to work and our community access to healthcare."
He also said the medical center will get a better financial deal with Tenet.
"The commonality of our value assessment becomes closer with Tenet because Tenet is closer in size to us in this market," he said.
Harrell wouldn't say why Georgia Baptist decided to go for an outright sale to Tenet rather than the type of joint venture it had it mind with Columbia.
Tenet, the country's second-largest hospital company, currently owns and operates 75 acute-care hospitals and related businesses in 13 states.
When the company's acquisition of Nashville-based OrNda HealthCorp closes next year, Tenet will have $8.5 billion in annual revenues and 126 hospitals. In the Atlanta area, Tenet's hospitals include 167-bed North Fulton Regional Hospital in Roswell, Ga., and 160-bed Spalding Regional Hospital in Griffin, Ga.
Under the Georgia Baptist deal, Tenet will acquire the medical center and convert it to for-profit status. Georgia Baptist Health Care System will then sign a long-term lease to operate the medical center as the tertiary-care provider for its network.
Georgia Baptist will continue to run its other operations on a not-for-profit basis. Georgia Baptist owns 36-bed Baptist North Hospital in Cumming, Ga., 38-bed Baptist Meriwether Hospital in Warm Springs, Ga., and 50-bed Baptist Hospital of Worth County in Sylvester, Ga. It also provides home care in 22 Georgia counties and owns four nursing homes, a college of nursing and 29 counseling centers.
The agreement further calls for several patient-care and support services to be jointly owned by Tenet and Georgia Baptist, including two ambulatory surgery centers and a high-capacity laundry facility. In addition, the two systems plan to form a joint managed-care contracting arm and a variety of other joint ventures to provide home-care and outpatient services.
For Tenet, the deal exemplifies the company's national strategy of building integrated delivery systems in urban areas where it already has a presence.
"We intend to build an alliance that is also attractive to other healthcare providers looking to join forces with a strong statewide network," said Ed Tudanger, senior vice president of Tenet's Southeast region.