A week after it slimmed down to its lowest hospital total in years, Columbia/HCA Healthcare Corp. was back in the acquisition game, entering a crowded field of bidders for a profitable county hospital in Tennessee.
"We have 11 facilities that provide for outstanding access to our system, except to the south," said Charles Evans, president of Columbia's MidAmerica Division. "Williamson County is due south, and the hospital is the cornerstone of the health system in Williamson County."
In a May 18 letter to Ronald Joyner, chief executive officer of Williamson Medical Center in Franklin, Tenn., and to the Williamson County Board of Commissioners, Columbia offered to buy the 109-bed hospital for $75 million.
On May 11, Columbia completed the spin-off of 56 of its hospitals into two newly created for-profit companies, trimming the chain's roster to about 240. q
"Even if you're on a diet, you get to eat lunch," said John Hindelong, healthcare analyst with Donaldson, Lufkin & Jenrette in New York. "I don't think it suggests that the company is going to reverse its divestitures and suddenly become a growth company, but I think when opportunities present themselves that are attractive, the company has always been and will continue to be interested in pursuing them."
The battle over the future ownership of Williamson Medical Center began earlier this year, when Williamson County Commissioner Charles Eades proposed getting the county out of the hospital business. The hospital's board of trustees responded with a proposed deal with Vanderbilt University Medical Center, in nearby Nashville.
Vanderbilt and the county-appointed hospital district would create a not-for-profit joint operating company to manage the hospital (May 17, p. 28). Vanderbilt would pay $11 million for a 49% stake in the company, which would contract-manage the hospital for 40 years.
After Vanderbilt's interest in Williamson Medical Center became known, Columbia, Quorum Health Group and a joint venture owned by Baptist Hospital and St. Thomas Hospital, two of Nashville's largest not-for-profits, made unsolicited offers for the facility.
The hospital posted net income of $2.6 million in the first quarter of this year, and reported about $4.6 million in profits on revenues of about $60 million in 1998, Joyner said.
Quorum has offered a few alternatives, which minimally include "a purchase price which reflects the fair value of the assets and operations of the hospital," a payoff of hospital debt and the option of a joint venture with a regional tertiary medical center such as Vanderbilt, according to a Quorum letter outlining the proposal. The letter was sent to David Buchanan, chairman of Williamson Medical Center's board.
Quorum does not own any hospitals in Tennessee, but it hopes to change that, said spokeswoman Shea Davis.
The fourth offer on the table is from Healthco, a not-for-profit company jointly owned by 545-bed Baptist and 516-bed St. Thomas. The partnership operates 191-bed Middle Tennessee Medical Center in Murfreesboro, Tenn.
The proposal does not have a dollar amount attached, but it could take the form of a merger between Williamson Medical Center and Healthco, or another type of partnership, said William Mott, another Williamson County commissioner.
Mott said the hospital's trustees were advised not to accept offers below $56.9 million based on a study conducted for the hospital by Dallas-based Community Health Corp., a company formed to preserve hospitals' not-for-profit status.
The county commissioners are scheduled to consider the proposals in June.