More than two years have passed since the Federal Trade Commission ordered Columbia/HCA Healthcare Corp. to sell its 50% interest in a Florida hospital to a competing not-for-profit facility.
The delay exposes the nation's largest for-profit hospital chain to millions of dollars in fines. Earlier this month, the FTC denied Nashville-based Columbia's request to extend the sale deadline even further.
Under a 1995 federal antitrust settlement that allowed Columbia to acquire Healthtrust, Columbia had to divest its interest in South Seminole Hospital in Longwood, Fla., by April 11, 1996. But litigation between Columbia and Orlando (Fla.) Regional Health System, South Seminole's co-owner, has delayed the divestiture.
Columbia inherited the stake in the 206-bed hospital from Healthtrust, which previously operated South Seminole through a precedent-setting joint venture with Orlando Regional. The 1992 joint venture was the first such deal between a for-profit system and a not-for-profit system blessed by the Internal Revenue Service.
After Columbia announced plans to acquire Healthtrust, Orlando Regional offered to buy Columbia's stake in South Seminole because it considered Columbia a competitor, not a business partner. After the sides couldn't agree on a price, Orlando Regional sued Columbia to force the issue.
In May 1996, a federal district court judge in Orlando agreed with Orlando Regional, ruling that Columbia had to sell the stake in South Seminole to its not-for-profit competitor. Since then, the two sides have been haggling over a sale price and other court-related costs.
"The key to the deal was always in Columbia's hands," said Elizabeth Piotrowski, deputy assistant director of the FTC's compliance division. "(Columbia) has said there is pending litigation, but that's not cause for an extension."
The FTC also appointed Robert C. Crosby, chairman, president and chief executive officer of Franklin, Tenn.-based Long Term Care Physicians Corp., as an independent trustee to complete the divestiture of South Seminole to Orlando Regional.
"It's been an issue of the value of Columbia's interest," said Columbia spokeswoman Kelly Tolson. "We are interested in divesting our 50% interest, and we are working with the trustee with that goal in mind."
The district court judge set a price of $14.3 million for the stake and said Columbia should get "110% of that price," which would be about $15.7 million.
Orlando Regional has managed the joint venture since it was formed, operating South Seminole as a for-profit facility.
Under federal law, the FTC could fine Columbia as much as $11,000 for each day it's out of compliance with its previous court order. Some 427 days have passed since the April 11, 1996, deadline. That would make Columbia liable for nearly $5 million in fines.