As one hospital company has fallen into financial difficulties, another hopes to get off the ground by picking up one of its hospitals.
As is common with for-profit hospital companies, executives of both chains trace their roots to the same, defunct corporation.
Last week, Essent Healthcare, a private, for-profit chain launched last June by former HealthTrust executive W. Hudson Connery Jr., signed a definitive agreement to buy its first hospital, 90-bed Doctors Hospital in Wentzville, Mo. The seller is Nashville-based New American Healthcare Corp., which owns eight other hospitals.
"This is part of a previously articulated strategy," said Dana McLendon, senior vice president and chief administrative officer of New American, and, like Connery, a former HealthTrust executive. Connery also spent time at another hospital company with Thomas Singleton, New American's president and chief executive officer.
Essent initiated the current deal, which is expected to be completed within several weeks, Connery said. Financial terms were not disclosed.
Doctors Hospital is about 35 miles west of St. Louis and is one of four hospitals in St. Charles County, Mo.
It suffered a net loss last year, although neither company would specify how much. The hospital's total net revenue for 1999 was about $20 million, Connery said.
Essent plans to spend several million dollars to upgrade the facility's technology, Connery said.
"We believe in the first year of operation we will be profitable," he said.
New American has had financial struggles that have prevented it from investing properly in its facilities, Connery said. The company was delisted from the New York Stock Exchange in February after falling below thresholds for market capitalization and shareholder equity and has suffered multimillion-dollar losses in recent quarters (Dec. 13, p. 10).
It is still trying to sell Crosby Memorial Hospital in Picayune, Miss., after a failed attempt to sell it to a group of physicians.
Essent's general strategy is to link community hospitals it buys with nearby tertiary centers. It may try to woo a St. Louis-based tertiary-care hospital as an investment partner, clinical-care collaborator, or managed-care ally, Connery said.