Facing a multimillion-dollar loss in its latest quarter and told last week that it has fallen below the New York Stock Exchange's listing standards, Nashville-based New American Healthcare Corp. has plenty on its plate without worrying about building a replacement hospital for one of its facilities.
The trouble is, the company promised to build one when it bought the hospital just over a year ago.
That's why New American is trying to sell 71-bed Crosby Memorial Hospital, in Picayune, Miss., before the clock runs out in October 2003 and the company is contractually bound to begin serving patients in a newly constructed facility.
New American President and Chief Executive Officer Thomas Singleton said, "I'm not saying we're not financially able to do it. I'm just saying given where we are in our history, we'd prefer to give it to someone who could build it rather than build it ourselves."
Last week, the New York Stock Exchange announced New American had fallen below its $50 million threshold for market capitalization and shareholder equity. The company has 45 days to inform the NYSE about whether it plans to file a plan to correct the deficiencies.
In the quarter ended Sept. 30, New American lost $24 million, or $1.38 per share, on revenues of $44 million. In the same quarter last year, the company reported a profit of $481,000. Last week, the nine-hospital company's stock hovered under 40 cents per share.
When New American bought the hospital in Picayune, it promised to apply to the state for a certificate of need within a year, begin construction two years from that point and have a new facility up and running within four years of the CON approval, Singleton said.
The company received the CON in October.
The company is negotiating with two possible buyers, Singleton said.
But at least one buyer that was interested in the hospital during the summer has withdrawn its bid. Community Health Systems, Brentwood, Tenn., signed a letter of intent to buy the facility earlier this year but backed away from the deal.
Robert Hardison, CHS vice president of acquisitions, said the requirement to build a replacement hospital was not the reason the deal fell through. "It just didn't fit what we were trying to do," he said.
Cathy Crenshaw, director of human resources at Crosby Memorial, said New American officials have not told the hospital whether they plan to fulfill their obligations if they do not find a buyer. "We are kept out of the whole process," she said.
Hospital CEO Fred Woody issued a news release announcing cost-cutting measures the hospital has implemented. They include eliminating 42 part-time and full-time jobs and closing the hospital's money-losing home healthcare unit.