A restructuring of the nation's largest for-profit hospital company that began two years ago-and continues under the cloud of a federal investigation- culminated last week in the launch of two new hospital companies.
Columbia/HCA Healthcare Corp.'s fledgling spinoff companies, Triad Hospitals and LifePoint Hospitals, officially began trading on the NASDAQ system May 12.
The two companies had gradually cut their ties to Columbia over a period of months. In preparation for their debut last week, the companies began trading their stock May 7 on a "when issued" basis-a condition for new stocks that have been established but not yet issued. LifePoint began trading at $9.44 per share, and Triad began at $9 per share. Columbia was to receive $900 million in cash at the time of the spinoffs.
Wall Street greeted Columbia's reorganization warmly. The stock remains well above its 52-week low of $17, priced at $25.31 in midday trading May 13 on the New York Stock Exchange, even as a criminal trial of several Columbia executives continues in Florida and a federal probe of alleged Medicare fraud looms at Columbia hospitals.
Triad was formerly Columbia's Pacific Group. Based in Dallas, it has 33 hospitals that are in either small cities or large urban areas with high population growth. LifePoint, formerly Columbia's America Group, has 23 rural hospitals. The slimmed-down Columbia will eventually have about 220 hospitals. Following the spinoff, it had about 240, Columbia spokesman Jeff Prescott said. The company is still trying to shed some hospitals that were formerly part of its Atlantic Group, the bulk of which were sold to not-for-profit systems last year.
Columbia shareholders received one share of each of the new companies for every 19 shares of Columbia stock they own. The two new companies have been indemnified against Columbia's legal problems, but they are keeping some ties to their former parent. They will be able to continue participating in Columbia's group purchasing agreements, and they have contracts with Columbia to maintain their information systems.