Richard Rainwater, who helped bankroll the growth of Columbia/HCA Healthcare Corp. to its position as the nation's largest hospital chain, could be getting deep into the hospital business again.
This time, it's psychiatric facilities.
Rainwater, 53, is chairman and the largest shareholder of Crescent Operating, a Fort Worth, Texas-based company spun off last year from the publicly traded real estate investment trust Crescent Real Estate Equities, of which Rainwater also is chairman.
The REIT buys businesses, primarily hotels and office buildings, and leases them to Crescent Operating, which has a 50% stake in the nation's largest psychiatric hospital chain, Charter Behavioral Health Systems.
Earlier this month, Crescent Operating announced plans to buy the remaining stake from Magellan Health Services Systems for $310 million (March 9, p. 13). And MODERN HEALTHCARE has learned that Crescent Operating likely will spin off the psychiatric hospital business into a separate company.
The catalyst for that move appears to be an inherent conflict in simultaneously operating casinos and gambling addiction clinics. In January, the Crescent REIT announced plans to acquire Station Casinos of Las Vegas for $1.7 billion and lease the operations to Crescent Operating. The sale is expected to close sometime in the third quarter.
But many of Charter's 88 psychiatric facilities run gambling addiction programs, with the larg-est such program in Las Vegas.
A spokesman for Crescent Operating and Charter last week confirmed that the psychiatric business might be spun off into a new publicly traded company two to three months after the Crescent-Magellan deal closes. "At this point, the company is looking at all options," spokesman Joel Weiden said.
A spinoff would bring Rainwater back as a major player in the hospital industry.
In 1987 Rainwater and former Columbia Chairman and Chief Executive Officer Richard Scott put up $125,000 each, formed a partnership with physicians in El Paso and bought two hospitals in July of the next year. That deal led to Columbia Hospital Corp., the predecessor to today's for-profit hospital giant.
Rainwater was a board member of Hospital Corporation of America and resigned his position shortly before its 1994 merger with Columbia. His wife, Darla Moore, joined the Columbia board in 1993 and resigned in 1995.
Rainwater and Moore still own about 8 million Columbia shares, a 1.2% stake in the company worth about $250 million.
In January 1996, Rainwater and Moore bought a 12.3% stake in Magellan for $69.7 million. An investment separate from companies they own, it was the first sign Rainwater was focusing attention on the psychiatric business.
The move to launch Charter as an independent publicly traded company would make sense, analysts said.
"I think there is a good chance Charter does get launched on its own," said Peter Costa, an analyst with ABN AMRO Chicago Corp. in Boston. "I think you are seeing a resurgence of power at Charter."
Rainwater's fortune, estimated at $1.5 billion, includes a 12.5% stake in Crescent Real Estate Equities worth more than $400 million. Rainwater's stake in Crescent Operating is the largest of all shareholders', but an exact amount won't be known until its 10-K report is filed with the Securities and Exchange Commission.