At the beginning of the year, Phoenix-based Baptist Hospitals and Health Systems was operating four acute-care hospitals and two nursing facilities. By summer's end, Baptist will be running only its charitable foundation.
Baptist's demise as a healthcare system will come with the sale of its two nursing facilities to Phoenix-based Gables International, a deal that should close by the end of August, according to Gerald Wissink, Baptist's chief executive officer.
Baptist parceled off its acute-care facilities in six weeks during the late spring and early summer. The proceeds are being turned over to the Phoenix-based Foundation for Baptist Health Systems. The foundation, soon to be renamed, will make grants for yet-to-be-determined activities in Baptist's service area.
On May 31, Nashville-based for-profit Vanguard Health Systems purchased 222-bed Phoenix Baptist Hospital and Medical Center and 104-bed Arrowhead Community Hospital in Glendale, Ariz. The sales price for the hospitals wasn't disclosed, but the Business Journal of Phoenix reported that Vanguard paid at least $44.5 million. A Vanguard spokesman didn't return phone calls seeking comment.
On June 30, 39-bed La Paz Regional Hospital in Parker, Ariz., disaffiliated from Baptist and is now a stand-alone facility, Wissink said.
On July 1, Brentwood, Tenn.-based Community Health Systems purchased Baptist's 90-bed Western Arizona Regional Medical Center in Bullhead City for $66 million plus an undisclosed sum for working capital.
"We felt it was the best direction for the organization to take, particularly in light of all the financial challenges the industry faces," said Wissink, who cited reimbursement cuts from managed-care organizations and the Balanced Budget Act of 1997 for making it difficult to operate the hospitals. Baptist had announced early last year that it was looking for a buyer or equity partner.
Even without the payment crunch Baptist had had its share of operational difficulties. HCFA had decertified Western Arizona Regional for six months beginning in November 1997 after issues were raised about the quality of care at the facility. HCFA was poised to decertify Arrowhead Community Hospital in December 1998, but Baptist successfully sued to block the action.
Since the deals have been announced, Baptist has slashed its executive staff from 88 employees to 12. About 45 employees took jobs with Vanguard, while the remainder were either laid off or left Baptist on their own, Wissink said.
By October Wissink will leave Baptist himself, splitting time between consulting for Vanguard and the Foundation for Baptist Health Systems.
Baptist becomes the second hospital system in as many years to purposely unravel itself. Burbank, Calif.-based UniHealth similarly reduced itself to a charitable foundation through the sale of its eight hospitals to Catholic Healthcare West in late 1998.
Although Wissink has spent 19 years with Baptist and has been its CEO since 1988, he didn't express any sadness about dismantling the organization.
"We're quite pleased with our direction. We'll have very strong, viable facilities in the community, as well as a very solid (charitable) foundation."