Universal Health Services emerged as the largest buyer last week in a bankruptcy court auction of psychiatric hospitals operated by Charter Behavioral Health Systems, Modern Healthcare has learned.
The sale of 24 hospitals OK'd by the U.S. Bankruptcy Court in Wilmington, Del., last week repaints the nation's psychiatric provider landscape.
UHS, the King of Prussia, Pa.-based hospital chain, will buy 11 of the hospitals, bringing its psychiatric hospital holdings to 36 and making it the nation's largest provider of inpatient mental health services.
UHS executives confirmed the purchase, although the company has yet to publicly announce the acquisition.
The nation's second-largest provider is Behavioral Healthcare Corp., a Nashville, Tenn.-based chain with 22 hospitals. It did not expand that roster with any Charter purchases.
Of the 24 hospitals sold, Modern Healthcare has identified buyers for at least 17.
Details on purchase prices in many of the sales were not immediately available.
But Crescent Real Estate Equities, which owns 22 of the properties approved for sale last week, said it would net $115 million from the deals.
"The 11 new hospitals increase psychiatric hospitals' contribution to UHS revenue by 3 percentage points to 17%," said Kirk Gorman, UHS chief financial officer. "They are the best facilities that Charter had."
The sales are expected to close by August. Each sale is contingent on Charter's reaching an agreement that protects buyers from government claims, lawyers involved in the proceedings said. The Charter hospitals are under nationwide investigation by HHS and the Justice Department for possible Medicare fraud and overpayments.
All told, Charter is selling 37 facilities in 19 states and is still negotiating terms for the remaining 13 facilities.
Hospitals without buyers may be closed by Charter, returned to Crescent and sold for other uses.
Other buyers of the 24 hospitals sold at auction include:
* Adventist HealthCare, Rockville, Md., which will acquire 142-bed CBHS of Maryland at Potomac Ridge, Rockville, for $7.2 million. The hospital is next to 253-bed Shady Grove Adventist Hospital.
* A group of real estate investors called Louisville (Colo.) Care Partners, which will purchase 72-bed Charter Centennial Peaks Behavioral Health System, Louisville, Colo., for $1.6 million.
* Three psychiatrists at Charter Behavioral Health System of San Diego/API will acquire the 62-bed facility.
* Axon, an investor group backed by psychiatric hospital operator Neal Cury, will buy 90-bed Charter Behavioral Health System of New Jersey/Summit.
* Ramsay Youth Services, a Coral Gables, Fla.-based company that sold four hospitals to Charter in 1998, will purchase an undisclosed number of facilities.
* Four-hospital Parkview Health System, Fort Wayne, Ind., will buy 97-bed Charter Beacon Hospital, Fort Wayne.
Alpharetta, Ga.-based Charter filed for Chapter 11 bankruptcy protection in February shortly after closing 51 of its 88 hospitals during a period of about six months. Those don't include the 24 at auction.