A little-known company that made its latest splash with a deal for two Columbia/HCA Healthcare Corp. hospitals in Chicago intends to start making waves nationwide.
The company, Scottsdale, Ariz.-based Doctors Community Healthcare Corp., announced Feb. 20 that it and a group of about 600 local physicians would purchase 523-bed Michael Reese Hospital and Medical Center and 213-bed Grant Hospital for an undisclosed amount.
A Doctors Community spokeswoman said the company hasn't decided how to finance the deal, expected to close in June. In the past, the company has used a mixture of debt, private equity and operational funds.
Doctors Community was started in 1991 by Scottsdale-based healthcare attorney Paul Tuft. It has majority stakes in three hospitals and affiliated medical groups: 60-bed Brea (Calif.) Community Hospital; 109-bed Hadley Memorial Hospital and Healthcare of Greater Washington in the District of Columbia; and 236-bed Pacifica Hospital of the Valley in Los Angeles.
A deal for 187-bed Boston Regional Medical Center in Stoneham, Mass., and an affiliated group is set to close in April.
Doctors Community drew $240 million in net revenues last year. Tuft wouldn't disclose its income.
The firm always develops relationships with physicians associated with the hospitals it buys, but the Chicago acquisition will include a "community investment" from civic groups and churches. Tuft expects Doctors Community to own 80% of the hospitals, while physicians, employees and community interests will own 20%.
"I think we have the right ingredients," Tuft said. "We have a lot of hard work to do, but we're committed to it, and it's worth the risk."
Although Michael Reese and Grant have underperformed financially, Tuft said the acquisition would not include debt other than some minor accounts receivables.
According to HCIA,, a Baltimore-based healthcare information company, Michael Reese posted net income of $22.7 million on $171.4 million in net revenues in 1996 after an $11.2 million loss in 1995. Grant earned $571,000 on $55.1 million in net revenues after a loss of $8.5 million in 1995.
Chicago is a highly competitive market, but Tuft said Doctors Community will fill a niche that competitors don't. "We will really focus on the local needs of the neighborhood," he said.
Tuft, who is chairman of Doctors Community, said the firm is pursuing healthcare partnerships similar to that planned in Chicago in its other three markets.
The company plans to announce a lease agreement in the Los Angeles area shortly, and deals in its pipeline would surpass the size of its Chicago acquisition, the largest for the firm so far, Tuft said.
Doctors Community is its fourth name. The firm also has operated as Pacin, Capital America and Doctors Corporation of America.
A spokeswoman said the name changes were part of an internal process of defining the company. "Doctors Community Healthcare Corp. better matches what we do and what we'll continue to be doing," the spokeswoman said.