The former chief executive officer of a bankrupt hospital chain wants to parlay his old company's financial woes into a fresh start for his career.
Robert Martin, 51, founded New American Healthcare Corp. in 1995 but resigned as CEO and director of the company on Feb. 22, 1999.
Nashville-based New American filed for bankruptcy last month and announced its intentions to divest all eight of its hospitals (April 24, p. 6).
At the time of his resignation, Martin signed a severance and "noncompete" agreement that prevented him from buying multiple hospitals or trying to hire employees away from New American, he said.
But when New American stopped sending him severance checks in March, with more than a year and $300,000 left to go under the agreement, Martin said he was freed from restraints.
"The elements of the contract that I'd agreed to abide by are no longer valid," Martin said. `All bets are off."
Martin, a senior regional vice president at HealthTrust-The Hospital Co., left to found New American when Columbia/HCA Healthcare Corp. bought HealthTrust. He was at the helm when New American went public in August 1998, although he left not long after that.
Martin ran into opposition about how to manage the company from Welsh, Carson, Anderson and Stowe, a New York investment firm that had a majority interest in New American before it went public.
Dana McLendon, senior vice president and chief administrative officer of New American, declined to comment on the severance agreement, although he confirmed that the company has stopped paying all severance payments to corporate officers who have left the company.
Partly because of the noncompete agreement, Martin did not jump to another healthcare job when he resigned from New American last year.
But last November he formed a new company, called Healthstar Corp.
At the time, under the severance agreement with New American, Martin was allowed to buy only one hospital, he said. Now, however, he has decided to try to buy or lease up to 11 hospitals in rural markets within five years.
His acquisition targets are hospitals with $20 million to $30 million in net revenue in states within a 600-mile radius of his Brentwood, Tenn., home.
Martin is seeking but has not obtained $20 million to $30 million of start-up capital from private investors. He is also recruiting a chief financial officer and chief operating officer. Martin is president and CEO of the new company.