Samaritan Health System completed the sale of two of its hospitals last week, paring the Phoenix-based system down to just four facilities built around its flagship, 714-bed Good Samaritan Regional Medical Center.
The system, which once sought to merge its entire operation with another system, also sold a hospital last month but does not plan to sell any more facilities. Before the three recent sales, Samaritan owned six hospitals and leased another.
In the first deal, Samaritan sold 86-bed Columbia San Clemente (Calif.) Hospital and Medical Center to NetCare Health Systems of Nashville. In the second, Samaritan sold 213-bed Maryvale Samaritan Medical Center in Phoenix to Vanguard Health Systems, also based in Nashville.
Financial terms were not disclosed.
Vanguard will convert Maryvale into a for-profit, renaming it Maryvale Hospital Medical Center. The Maryvale deal had been pending since January (Feb. 2, p. 4).
Meanwhile, NetCare plans to change the name of the San Clemente facility to San Clemente Medical Center and convert it to a for-profit.
Nashville-based Columbia/HCA Healthcare Corp. had managed the San Clemente hospital in a three-year joint venture with Samaritan, which owned the hospital but leased it to the venture. Columbia had majority partnership of the joint venture.
Columbia notified Samaritan in February that it did not want to renew the joint venture contract, which expired May 15, said Chuck Welliver, executive vice president and chief operating officer of Samaritan. The contract was extended until the deal with NetCare was completed.
In March the Internal Revenue Service ruled that not-for-profit hospitals must control any joint venture with a for-profit hospital or system if they want to maintain their federal tax exemption (March 9, p. 3).
Columbia's decision not to renew the lease was unrelated to the IRS ruling, Columbia spokesman Gary Koops said.
Samaritan decided to sell San Clemente, its only hospital in California, as part of its strategy to concentrate its business in Arizona, Welliver said.
Samaritan owns three hospitals and manages one other in Arizona. The company has been selling off hospitals after failed attempts to merge the entire system with Phoenix-based Mercy Healthcare Arizona, whose parent company is San Francisco-based Catholic Healthcare West. Another merger, with Tucson-based Health Partners of Southern Arizona, fell through last year.
Samaritan rejected acquisition bids from Columbia and Santa Barbara, Calif.-based Tenet Healthcare Corp. because it wanted to keep its not-for-profit status, said Sue Chasin, a Samaritan spokeswoman.
Samaritan, which has $315 million in debt, had sought a partner since late 1996 but changed its strategy after the mergers collapsed, Chasin added.
One of Samaritan's hospitals was sold last month to Province Healthcare in Brentwood, Tenn., which bought 118-bed Havasu Samaritan Regional Hospital in Lake Havasu City, Ariz., for $105.5 million (May 11, p. 12).
NetCare hopes to expand medical staff and services at the San Clemente hospital soon, said NetCare spokesman Nicholas Owens.
NetCare owns and operates 10 hospitals with 593 beds and four nursing homes in California, Georgia, Mississippi and Texas.