Voters in Selma, Calif., have approved the sale of their 57-bed district hospital to Adventist Health, adding another rural hospital to Adventist's growing empire.
The sale of Selma District Hospital is expected to close by the end of July, pending final approval from state regulators. Adventist officials say the deal is too small to trigger federal antitrust review.
Roseville, Calif.-based Adventist, which owns 20 hospitals in California, Hawaii, Oregon and Washington state, has managed the public district hospital since April 1997. It operates five hospitals in central California, including two facilities about 20 miles from Selma, in Hanford.
More than 92% of the 1,522 ballots cast in a June 8 special election supported the measure that authorized the sale. Only 115 Selma Health Care District voters opposed the measure.
California law requires voter approval from local constituents when public district hospitals seek to transfer 50% or more of their assets to an outsider.
No cash will change hands in the pending transfer, but Adventist will take on nearly $8 million in debt, according to hospital Administrator Ed Palacios.
Selma expects to lose about $2 million on net revenues of about $15 million in the fiscal year ending June 30, Palacios said. District officials thought the hospital needed to belong to a larger system to survive.
Adventist, meanwhile, listed Selma's acquisition as a major strategic initiative for this year in its 1998 annual report. The not-for-profit system also noted that it issued $114 million in bonds last year to refinance existing debt and provide new funds for capital projects in California.
Last year, Adventist posted profits of $20.4 million on $1.16 billion in net revenues. That's a steep drop in profitability from previous years but as good or better than the profits of Adventist's primary competitors, Sutter Health and Catholic Healthcare West.
Adventist reported profits of $55.4 million and $51.2 million in 1997 and 1996, respectively. Net revenues each year were roughly $1 billion.
Robert Carmen, Adventist's executive vice president, said in a written statement that Adventist plans to modernize the 37-year-old hospital's physical plant and fund an enhanced medical staff recruitment effort.
Palacios confirmed that Adventist will invest $2.3 million in Selma's capital budget over the next three years.
The Selma acquisition follows by about a year Adventist's purchase of 40-bed Central Valley General Hospital in Hanford, where the system also operates 59-bed Hanford Community Medical Center. The two facilities are the only acute-care hospitals in Hanford, a small, agricultural community.
Adventist plans to change the Selma facility's name to Selma Community Hospital, but no drastic changes in management or staffing are expected, Palacios said.