MissionHealth tried to lasso an inaugural deal in North Carolina, but officials there didn't want the more than $200 million the company was offering for a partnership with Pitt County Memorial Hospital, Greenville.
Pitt County officials never voted on the offer MissionHealth Chief Executive Officer Joshua Nemzoff made last month, and he withdrew it the following day.
"We have absolutely no interest in providing capital to a hospital that doesn't want it," Nemzoff said. "This is a political situation."
Instead, Pitt County officials have moved forward on a proposal the hospital's leadership has pushed for more than a year.
Executives hope to reorganize under state law to turn the 680-bed public hospital into a private not-for-profit facility.
Dave McRae, the hospital's CEO, said taking the hospital private lifts restrictions on how it does business, including investing money outside Pitt County.
A final county vote on taking the hospital private hasn't been scheduled.
The county rejected a proposal from the hospital to turn private late last year. At the time, the hospital offered the county an upfront payment of $10 million and additional payments for a total of $18 million (Nov. 17, 1997, p. 32).
The hospital earned $29 million on total patient revenues of $370 million in 1995, the last year for which data was available, according to the American Hospital Directory, a Louisville, Ky.-based healthcare information firm.
Although privatizing the Pitt County hospital involves money, an equity investment from Nemzoff's MissionHealth wasn't what the hospital was after. "We have never had a capital acquisition problem," McRae said.
A limited liability company, MissionHealth offered an upfront payment of almost $200 million in exchange for a 75% stake in the hospital's excess cash flow.
According to local published reports, MissionHealth officials told the county the deal could have meant a total benefit of more than $530 million, including the upfront payment, the value of property and sales taxes, and the hospital's cash and cash equivalents.
MissionHealth was started earlier this year so not-for-profit hospitals could form partnerships with an equity investor to get the access to capital they need (Feb. 2, p. 22, and Feb. 23, p. 68).
Although the Pitt County deal didn't take off, Nemzoff said talks are under way for almost a dozen other potential deals.