The University of Missouri at Columbia paid $34.5 million to purchase 265-bed Columbia Regional Hospital from Tenet Healthcare Corp., the university revealed last week.
Without disclosing the sales price at the time, the for-profit company and the state university first announced the purchase in July. It was completed on Oct. 1.
The university waited to disclose the price until after the deal was done.
"We're a public entity. We have a responsibility to report to people on what we buy and sell," said Maurice Manring, a spokesman for the university.
Columbia Regional was one of the 20 hospitals that Santa Barbara, Calif.-based Tenet put up for sale earlier this year. To date, Tenet has sold or has entered agreements to sell 14 of those hospitals.
The university said it paid an amount equal to about 60% of the hospital's annual revenues. Many other buyers are paying higher relative prices for the divested Tenet hospitals, the university said.
Without confirming the purchase price, Harry Anderson, a Tenet spokesman, said the company always had assumed that the university eventually would disclose what it paid for the hospital.
"We had a very vigorous negotiation. We feel we got a fair value for the hospital," Anderson said.
The university considered putting its own 383-bed tertiary hospital, University Hospitals and Clinics, up for sale in 1995, but public outcry halted the plan in its tracks. The university Board of Curators then decided that to maintain its teaching and research mission, as well as serve the community and handle indigent care, it would have to become a consolidator of healthcare in the region. The board decided that if Columbia Regional ever came on the market, it would make a bid.
The university plans to maintain Columbia Regional as a community hospital, handling simpler medical cases, while directing more complex cases to the university hospital. No job cuts are planned.
"We believe the university can benefit its bottom line and research mission by operating a research hospital and community hospital side-by-side," Manring said. The university had planned to expand its hospital's outpatient capabilities and upgrade patient-care facilities, and had approved $100 million in bonding authority for that purpose. "The price (of Columbia Regional) turned out to be a lot cheaper than building. We simultaneously have solved most of our facilities problems and expanded our patient base," Manring said.
"If it can get (Columbia Regional) up to its normal patient census, we expect it to be profitable," he said.
The hospital earned $3.7 million on net patient revenues of $59.5 million in its latest fiscal year.
University Hospitals posted a $4.2 million profit on net patient revenues of $228 million in its latest fiscal year.