Columbia/HCA Healthcare Corp.'s plans to lease away two facilities it originally said it would keep has analysts and consultants wondering about top brass' business strategy.
Last week, Columbia signed a letter of intent to lease 103-bed Regional Hospital of Jackson (Tenn.) and 65-bed Volunteer General Hospital in Martin, Tenn., to Methodist Health Systems in Memphis, Tenn. Terms of the lease agreements weren't disclosed.
Under the proposed agreements, each hospital would become part of the Methodist system and would operate as not-for-profits. Methodist expects the 40-year lease agreements for both facilities to be completed by Jan. 31, 1998.
Both facilities were expected to stay with Columbia as part of the restructuring plan unveiled last month. The plan calls for Columbia to spin off 108 hospitals into three newly created companies while keeping 232 hospitals in two separate divisions (Nov. 24, p. 2).
With two of the "keeper" hospitals now being leased, its appears that the original spinoff plans are flexible.
"Decisions like this are being made on a case-by-case basis," said Columbia spokesman Jeff Prescott. "This is more a sign of our philosophy of looking at what's best for communities and hospitals."
The lease agreements came less than one week after Columbia, the nation's largest healthcare company, said it was putting two of its eight Chicago area hospitals up for sale: 523-bed Michael Reese Hospital and Medical Center and 213-bed Grant Hospital. Those two facilities as well as Columbia's other six Chicago-area hospitals were intended to be spun off in the restructuring.
In Framingham, Mass., MetroWest Medical Center denied published reports that Columbia is putting it on the trading block. A spokesman said the two-campus system would become part of one of the spinoff companies as planned.
Tenet Healthcare Corp., which is trying to build a network in New England, has expressed interest in the 423-bed medical center, and MetroWest's new chief executive officer, Thomas Hennessy, was hired away from Tenet. But MetroWest spokesman Michael Rose said Hennessy hasn't received any indication from Columbia that the medical center is for sale.
"It sounds like anything and everything is up for grabs," said healthcare anaylst Sheryl Skolnick, with BancAmerica Robertson Stephens in New York. "It makes it difficult to understand what's left at the end of the day."
In its restructuring plans, Columbia said it would take between 12 to 18 months before the spinoffs were complete. Many observers speculated that the spinoffs wouldn't happen before Columbia resolved issues with the federal and state investigators.
"It surprised me that they're monetizing assets at the rate they're doing it," considering some form of a settlement with the government hasn't been reached, said Peter Emch, a healthcare analyst with BT Alex. Brown in Baltimore.
Separately, Columbia and 518-bed University Medical Center in Jacksonville, Fla., canceled their pending joint venture agreement last week. The deal had been hamstrung by a pending tax ruling from the Internal Revenue Service. Meanwhile, Gainesville, Fla.-based Shands HealthCare still is pursuing a proposed partnership with UMC. In June, Columbia waived its right to ban UMC from talking to other systems about potential deals.
Also last week, Columbia said top executives at its hospitals would take on new roles as ethics and compliance officers, Prescott confirmed.
The new job would go to either the chief executive officer, chief operating officer or chief nursing officer at each facility.
In addition, Columbia's board created a new committee on compliance and ethics. Board member Sister Judith Ann Karam will head the committee. Karam, of the Sisters of Charity of St. Augustine in Cleveland, became a board member after Columbia entered a 50-50 joint venture with Sisters of Charity's health system in 1995.