Not-for-profit Memorial Hermann Healthcare System in Houston and for-profit Columbia/HCA Healthcare Corp. hope to execute a four-hospital swap that combined with another Memorial Hermann deal would give each a dominant market position in the Texas cities involved.
The parties say the transaction won't create any antitrust problems because the hospitals compete in a wide geographic market. They say they expect to file for federal antitrust clearance early this week and close both deals by July 1.
Memorial Hermann would acquire 184-bed Rosewood Medical Center in Houston, 65-bed Fort Bend Medical Center in Missouri City, Texas, and 72-bed Katy (Texas) Medical Center from Columbia. In exchange, Columbia would get Memorial Hermann's 173-bed Memorial Hospital in Pasadena, Texas, and an undisclosed amount of cash.
In another transaction, Memorial Hermann would pay an undisclosed sum to acquire 364-bed Beaumont (Texas) Medical and Surgical Hospital and the physical assets of recently closed 69-bed Silsbee (Texas) Doctors Hospital from Triad Hospitals, a Columbia spinoff formed May 11.
Last week's announcement of both deals came three months after Memorial Hermann completed a mergerlike partnership with two-hospital Baptist Healthcare System in Beaumont. In the greater Houston area, Memorial Hermann operates 10 acute-care hospitals, a psychiatric hospital and a rehabilitation hospital.
Rosewood's service area overlaps with three of Memorial Hermann's hospitals on Houston's west side, providing opportunities to reduce overhead, said Memorial Hermann President and Chief Executive Officer Dan Wilford. The two smaller hospitals, Fort Bend and Katy Medical, would give the system new access to Houston's growing west and southwest suburbs, he said.
In Beaumont, the acquisition from Triad would give Memorial Hermann control of 651, or 59%, of the city's 1,112 beds. Since March, Memorial Hermann has operated Baptist Hospital of Southeast Texas in the city. That hospital is just two blocks from Beaumont Medical and Surgical.
Meanwhile, Columbia would gain an acute-care monopoly in Pasadena, where it owns the city's only other hospital, 280-bed Bayshore Medical Center. Mike Snow, president of Columbia's Gulf Coast division, said antitrust isn't a problem because the hospitals compete in the greater Houston area.