Although its home base is in the healthcare Mecca of Nashville, Vanguard Health Systems has spread its tentacles into urban markets from the Midwest to the West Coast.
In its latest planned move, the for-profit hospital chain hopes to make an inroad into the Dayton, Ohio, market. Vanguard has entered into exclusive negotiations to purchase 321-bed Franciscan Medical Center and a nearby retirement community that is called Franciscan at St. Leonard; a minority interest in the Dayton Heart Hospital; and some physician practices from the Franciscan Health System of the Ohio Valley, a Catholic system.
The Dayton facilities are all that's left of Franciscan's parent, Latham, N.Y.-based Franciscan Health Partnership, which sold its other eight acute-care hospitals to Bon Secours Health System in Marriottsville, Md., at the end of last year.
Charles Martin Jr., who is Vanguard's chairman, president and chief executive officer, said Vanguard soon hopes to expand in "concentric circles" from its existing markets.
The reason the company has chosen to buy hospitals in such regionally disparate urban areas is to increase diversification, he said. Although the company did not search out the Dayton market, the purchase opportunity did fit in with the company's strategy, he said.
Vanguard owns five hospitals; its first acquisition in 1998 was that of 213-bed Maryvale Hospital Medical Center in Phoenix. It subsequently bought three hospitals in California and one in the Chicago suburb of Berwyn, Ill.
Unlike some of the larger for-profit chains, such as Columbia/HCA Healthcare Corp., that have built strategies around becoming the dominant player in overall urban markets, Vanguard has focused on building market share in smaller areas within urban markets.
"We will selectively go into other urban markets, those that do have potential for further consolidation," Martin said.
He said he expects Vanguard to add to its Phoenix holdings by the end of this month by buying 222-bed Phoenix Baptist Hospital and Medical Center and 104-bed Arrowhead Community Hospital and Medical Center in Glendale, Ariz. The company is also looking to expand in the Chicago market, he said.
Vanguard is expected to complete due diligence on the Franciscan hospital in Dayton within the next month, and the sale could close within 90 days pending regulatory approvals, said Nancy Thickel, a spokeswoman for the Dayton hospital.
The hospital lost $2.5 million on net patient revenue of $135 million in 1998, according to data from HCIA-Sachs, a Baltimore-based healthcare information firm.
Vanguard began talking with Franciscan last fall, Thickel said. Talks were suspended, however, when the hospital entered exclusive negotiations with Premier Health Partners, a joint operating company that runs Dayton's independent 714-bed Miami Valley Hospital and 324-bed Good Samaritan Hospital and Health Center, which is owned by Denver-based Catholic Health Initiatives. Those negotiations were called off in April.