Acquisition-hungry Health Management Associates has agreed to pay more than $100 million to take over the operations of a bankrupt county hospital system in central Florida.
Two-hospital Regional Healthcare, owned by Hernando County, includes a 91-bed facility in Brooksville and a 75-bed facility in Spring Hill. It also has a freestanding outpatient center in unincorporated Hernando County.
HMA, a Naples, Fla.-based hospital chain, will run the facilities under a 30-year lease with the county that went into effect June 1.
The hospitals will remain not-for-profit, but HMA will pay taxes on the money it earns from operating the facilities.
Bonnie Dyga, county administrator, said HMA paid the county $73.5 million for the right to operate the system, plus $300,000 in annual rent.
HMA also has agreed to invest $25 million in capital improvements and create a trust of $1.2 million to subsidize nurses and residents at the hospitals. HMA will retain any profits.
The two hospitals had net income of $5.4 million on $48.6 million in net patient revenues in 1996, according to HCIA, a Baltimore-based healthcare information company. No information on 1997 results was available.
Dyga said that the hospital system had been in bankruptcy for the previous five years. Quorum Health Resources, Nashville, had operated the hospitals under a management contract until June 1, when HMA took over.
William Schoen, HMA's chief executive officer, said Regional had slipped into Chapter 11 bankruptcy after borrowing heavily to build a new hospital in Spring Hill.
"They put a great deal of debt on the books of the system" and were unable to meet the debt payments, Schoen said.
HMA had announced its binding agreement to lease the facilities in March. Florida Hospital in Orlando had been negotiating with Regional in 1997, but those talks did not bear fruit.
"They're very viable hospitals," Schoen said. "This is a tremendously growing area in Florida."
Hernando County had 101,000 residents in 1990. Today it has 125,000, and by 2005 it is projected to have 151,000. By 2020, when HMA is in the 21st year of its lease, it should have 205,000. Many of those residents will be eligible for Medicare. Fueling the growth is a major highway scheduled to be built connecting the area to Tampa, Fla.
Of HMA's 32 hospitals, 10 are in Florida. It has hospitals in Haines City, Lakeland and Orlando, all within 80 miles of Hernando County.