Intermountain Health Care will shed its Wyoming hospitals, selling 38-bed Evanston (Wyo.) Regional Hospital to Community Health Systems and terminating its management agreement with 39-bed Star Valley Hospital in Afton.
The moves will reduce not-for-profit Intermountain's ownership to 22 hospitals in Utah and Idaho and end a hospital-related presence in Wyoming dating back to the 1940s.
Intermountain will continue to market its commercial HMO, IHC Direct Care, in Wyoming, where it covers 7,000 enrollees.
Intermountain says its decision to terminate a two-decade management relationship with Star Valley effective Oct. 1 prompted the sale of Evanston to CHS, a Brentwood, Tenn.-based for-profit, a deal also expected to close Oct. 1.
The facilities are about 100 miles apart in a sparsely populated area of western Wyoming near the Idaho and Utah borders.
"Being left with only (Evanston Regional) in Wyoming wasn't enough presence to justify our staying there," said Intermountain spokesman Daron Cowley. "We wanted to focus on our core business in Utah and Idaho."
Intermountain said it would use the proceeds from the Evanston Regional sale to retire the hospital's $10 million in bond debt. Cowley initially estimated the sale price at $8.5 million but later said that figure wasn't firm. Intermountain has owned the facility since 1985.
The deal will give CHS, which owns or manages 45 hospitals in 18 states, its first hospital in Wyoming.
"It's a dominant provider in the community and very well run," said CHS spokeswoman Beth Brisbane.
Evanston Regional reported net income of $854,928 on net patient revenues of $10.6 million in 1997, the most recent year available, according to HCIA, a Baltimore-based healthcare data firm.
The Wyoming attorney general must approve the deal under the state's general corporations code. Brisbane said a valuation of assets would be part of the attorney general's scrutiny of the deal.
CHS officials said Evanston Regional would be run by a 10- to 12-member board of hospital executives, physicians and members of the community.
Intermountain's decision to end its management of Star Valley was attributed to an awkward governance structure for the facility.
Two boards oversee hospital operations: a 10-member board appointed by Intermountain that serves in an advisory role, and a six-member board that runs the North Lincoln Hospital District.
The district, which owns the hospital, generates about $150,000 annually in taxes to help support the hospital and pays Intermountain to manage the facility. Cowley could not disclose Intermountain's annual management fee.
While North Lincoln Hospital District board Chairman Mark Taylor and Cowley said all parties worked well together, they said Intermountain didn't support recent capital improvements launched by the district. Those included the construction of a clinic in nearby Alpine, Wyo., the addition of a 24-bed long-term-care facility to the hospital and the purchase of new equipment. Taylor could not say how much the district spent on the improvements.
"We felt that investing in large capital improvements that had a questionable financial future was not the way to go," Cowley said.
The district also wanted Intermountain to bear financial risks as part of managing the hospital, Taylor said.
Star Valley reported net income of $37,337 on net patient revenues of
$3.7 million in 1997, according to HCIA, down from net income of $417,460 on net patient revenues of $3.5 million in 1996.
The Mormon Church purchased Star Valley in 1943, and Intermountain took over management of the hospital in 1975 when the church spun off its hospitals.
"It's been a very difficult decision to exit the state, but it's been studied and reviewed for a long time," Cowley said.