Larry Langford, mayor of Fairfield, Ala., wasn't about to let 80-year-old Lloyd Noland Hospital and Health System and its 600 jobs die.
The hospital's owner, Santa Barbara, Calif.-based Tenet Healthcare Corp., had said that if it couldn't sell the 222-bed facility by Sept. 30, it would close it.
Hours before the deadline the city's Fairfield Health Industry Authority ponied up $10 million and promised another $11.2 million in renovations and working capital.
The authority revealed an unlikely partner: Birmingham, Ala.-based HealthSouth Corp. The nation's largest post-acute-care provider will cover the debt payments for the city's bond issues and will operate the hospital, which will be called HealthSouth Hospital of Fairfield.
Tenet spokesman Lance Ignon said Lloyd Noland had not lost money, but Tenet opted to sell it when the chain's plans to build a Birmingham-area network fizzled. "We weren't able to expand that network to a level we felt was appropriate to our strategy," he said.
Tenet still operates 468-bed Brookwood Medical Center in Birmingham.
Ignon said Tenet had never publicly announced the hospital was for sale. The chain bought the hospital in 1996 from the Lloyd Noland Foundation for a reported $57 million.
Describing his interest in the deal, Langford, 51, said, "I couldn't afford to let (Lloyd Noland) close. But I wanted a very unique deal. Tenet essentially donated the hospital and the 41-acre campus it sits on for $10 million. That allows them to take a huge tax deduction."
The day after the Lloyd Noland sale was announced, Langford said, doctors and staff at the facility asked him what he knew about running a hospital. "I said I don't have to know anything about it. All I have to know is where to find someone who does know," he said.
That someone is HealthSouth President and Chief Executive Officer Richard Scrushy, who said his motivation stemmed from his friendship with Langford, corporate hometown loyalty and a solid business opportunity.
Scrushy conceded that acute-care hospitals don't constitute a big part of HealthSouth's business but said, "There's nothing unusual about this deal. It's a fun project, and it'll be great for the city. It involved very little investment on our part and has the potential for a very good return.
"(Lloyd Noland) is located within 10 miles of 200,000 people, with only 16% of them eligible for Medicare," he said. "It's one of the hottest growth areas in Alabama."
Lloyd Noland will mesh well with 181-bed HealthSouth Medical Center in Birmingham, Scrushy said. Specialists at the medical center will also work at HealthSouth of Fairfield, he said.
Some services will be added at Lloyd Noland, but the hospital will probably eliminate obstetrics, Scrushy said.
HealthSouth will sign a five-year management agreement with another five-year option.
Langford said HealthSouth and the city are conducting due diligence, but he anticipated the deal would be completed by Oct. 31.
Scrushy was more cautious. "We are optimistic that this transaction will close, but it hasn't been completed yet."