The game of musical chairs that characterizes the investor-owned hospital sector began another round last week with the proposed sale of five Tenet Healthcare Corp. hospitals to New American Healthcare Corp.
The five hospitals once were owned by OrNda HealthCorp, which Tenet acquired last year for $3.1 billion.
New American, meanwhile, is a descendant of sorts of Columbia/HCA Healthcare Corp., chief rival of Santa Barbara, Calif.-based Tenet. New American, based in Brentwood, Tenn., was formed in 1995 by two former executives of Healthtrust, which Columbia acquired in 1995 for $5.6 billion.
Not making a bid for the five hospitals was Vanguard Health Systems, formed last July by Charles Martin Jr., former OrNda chairman, president and chief executive officer. His company had been on an unsuccessful seven-month prowl for acquisitions until recently (See story, below).
Tenet spokesman Harry Anderson said he "wasn't aware of any conversations with Charlie Martin."
The five hospitals to be sold by Tenet to New American are 123-bed Woodland Park Hospital and 77-bed Eastmoreland Hospital, both in Portland, Ore.; 106-bed Davenport (Iowa) Medical Center; 102-bed Lander Valley Medical Center, Lander, Wyo.; and 146-bed Puget Sound Hospital in Tacoma, Wash. Terms were not disclosed for any of the deals.
The sale of the first four hospitals was completed Feb. 2, and the sale of the fifth is expected to close by June 30.
Anderson said the five facilities couldn't be linked to broader networks and Tenet decided last summer to sell them.
"We had some markets where we knew we were not going to buy a network," Anderson said.
While a five-hospital sell-off is unusual for Tenet, a multihospital acquisition may not be out of the norm for New American in the future, said Dana McLendon Jr., New American senior vice president of finance and administration, and former vice president of system integration at Healthtrust.
"It's something we've always saidthat we'd do multihospital acquisitions when it made sense to do so," McLendon said. There's a 50-50 chance that the company's next acquisition will be a multihospital deal, he said.
"Our company has matured to the point where we could do a multihospital acquisition and manage it," McLendon said. "The infrastructure is in place."
New American's five-year plan is to acquire 20 hospitals, averaging three to four a year, McLendon said.
The Tenet hospitals will up New American's total hospital count to nine.