Columbia/HCA Healthcare Corp. said last week it is selling its Florida home-care operations back to Melville, N.Y.-based Olsten Corp. for $34 million.
Columbia purchased the home-care operations from Olsten in 1994. As part of that sale, Olsten retained right of first refusal to acquire all the Florida operations. The deal includes certificates of need and about 80 offices; it is subject to a due-diligence review and government approval.
In February federal investigators unsealed more of a 74-page affidavit that alleged Columbia bought the home-care business from Olsten at a low cost and then paid sister company Olsten Health Management a handsome fee to manage the facilities. The U.S. Justice Department said in April that it notified Olsten and two of its subsidiaries that they are targets of a federal grand jury investigation into possible violation of criminal laws (April 27, p. 4).
Meanwhile, federal investigators went to Columbia's satellite offices in Nashville to look at cost reports and other documents, seeking evidence of alleged overbilling schemes.
Spokesman Jeff Prescott said he wasn't sure how long the investigators were staying, but no warrant or subpoena was issued for the search. Columbia keeps its cost reports in three facilities. Investigators already have taken information from the other two, Prescott said, adding that this is part of the investigation federal officials started last year.
Another development may affect Columbia's pending $1.2 billion sale of 22 hospitals to a consortium of not-for-profit hospitals. One of six hospitals that consortium member Johnson City (Tenn.) Medical Center has agreed to buy from Columbia may be up for grabs.
The facility in question, Sycamore Shoals Hospital in Elizabethton, Tenn., was operated by the city of Elizabethton and Carter County before its sale to Columbia in 1984. As part of the deal, the local governments hold right of first refusal to repurchase the hospital.
Prescott said the company notified the city and county on June 11 about the transaction and their 30-day window to exercise their right of first refusal. But there is a reported question as to when that 30-day window started and when it expires.