The Internal Revenue Service late last week approved plans by Columbia/HCA Healthcare Corp. to spin off 58 of its 305 remaining hospitals into two new publicly traded companies.
The IRS said the deal would be tax- free and would not create any adverse tax consequences for Columbia or its existing shareholders.
"It took some discussion and some doing, but we're very pleased to have it," said Jeff Prescott, a Columbia spokesman.
Columbia plans to spin off its Pacific Group of hospitals into a new company called Triad Hospitals, based in Dallas, and its America Group of hospitals into a new company called LifePoint Hospitals, based in Nashville.
The transfer of ownership is expected to be completed later this month or in early May as planned, Prescott said.
Triad will include 35 hospitals and 15 surgery centers in secondary and urban markets in Alabama, Arizona, Arkansas, California, Kansas, Louisiana, Missouri, New Mexico, Oklahoma, Oregon and Texas. LifePoint will have 23 rural hospitals in Alabama, Florida, Georgia, Kansas, Kentucky, Louisiana, Tennessee, Utah and Wyoming.
"What Columbia has engaged in would be considered a plain-vanilla- type spinoff," said Douglas Mancino, a healthcare tax lawyer with McDermott, Will & Emery in Los Angeles. "You don't have to get a ruling, but because this is a transaction that requires special filings, no one except in very modest transactions will do it without a ruling."
When the two divisions are spun off, Columbia shareholders will receive shares of the two companies tax-free. After the distribution, shareholders will still own the same number of Columbia shares, according to the company's filings with the Securities and Exchange Commission.