Last week, Keith Granger was president and chief executive officer of two Quorum hospitals. This week, he is president and CEO of two Triad hospitals. But as Granger sees it, not much about his job has changed or will change.
Granger, who runs 235-bed Flowers Hospital, in Dothan, Ala., and 117-bed Medical Center Enterprise (Ala.), was one of several hospital executives who ended last week as employees of Quorum Health Group, Brentwood, Tenn., and began this week as employees of Triad Hospitals, Dallas.
After a 10-month courtship, Triad made it official on April 27 when it completed its $2.4 billion acquisition of Quorum, following shareholder votes by both companies one day earlier. Modern Healthcare was the first to disclose Quorum's decision to seek buyers last August and to reveal that Triad was a primary contender (Aug. 14, 2000, p. 2; Oct. 9, 2000, p. 2).
The new 49-hospital Triad, which has roughly doubled in size with the acquisition to become the nation's third-largest investor-owned hospital chain, begins trading this week on the New York Stock Exchange under the ticker symbol "TRI," nearly two years after it spun off from former parent HCA-The Healthcare Co.
Quorum was also spun off from HCA in 1989 when it was a hospital management company. It bought its first hospital and was named Quorum Health Group in 1990.
"We've been focused on looking forward for some time," Granger said. "We look forward to the future chapters that continuing our mission and new ownership bring to our organizations."
Quorum faced turbulence in the months leading up to Triad's acquisition of the company. It paid $18 million late last year to settle a whistleblower lawsuit alleging home health fraud at Granger's hospital in Dothan, part of a much larger fraud settlement Quorum completed just before Triad bought the company.
Including the portion for Flowers Hospital, Quorum agreed to pay $100.5 million to settle Medicare fraud charges and ensure that the federal government would not try to recoup Medicare cost-report overpayments at its managed hospitals in the future (April 23, p. 18). The amount is $5 million more than Quorum had originally agreed to in a tentative settlement reached last October.
As Triad last week put the finishing touches on the deal, operations at Quorum headquarters in Brentwood began to wind down.
James Dalton, 58, Quorum's president and CEO, is going to take some time off, said Shea Davis, Quorum's spokeswoman. Dalton is not staying on at Triad but has been added to its board of directors. Five of Quorum's senior managers worked in recent weeks to help Triad through the transition. Though 74 of Quorum's corporate employees in Brentwood left last week, 43 are continuing to work for several months to help Triad convert information technology, accounting and other back-office functions; 11 decided to transfer to Quorum's subsidiary, Quorum Health Resources, which manages 200 hospitals.
Triad is expected to sell the management business, which remains in Brentwood, in the next three months, either in a management buyout in which Triad may maintain an equity interest or through an outright sale, said Triad Chairman and CEO James Shelton.
He has brought three of Quorum's regional managers to Triad and increased Triad's number of hospital divisions to five from three to make room for Quorum's hospitals. William Anderson, who had responsibility for Quorum's Fort Wayne, Ind., market, is now division president of Triad's Arkansas and Indiana hospitals. Marsha Powers, who was president of Quorum's southeast region, is division president in charge of Triad's Mississippi, New Mexico and South Carolina hospitals. Working with her as a division chief financial officer is Michael McCullough, who also came from Quorum, where he was a regional vice president of finance.
Powers said she has been working with Shelton and other members of Triad's management team to make the transition to nine hospitals from eight go smoothly.
"I can tell you from my conversations with the hospital CEOs and key physicians in our markets that they feel very comfortable with the transition," she said.
Shelton has made it a priority to put both Quorum and Triad hospitals in each division to make sure there are no lingering differences between the two companies' cultures or operations, he said.
"Our goal is to still keep our divisions relatively small," he said. "We want to make sure there are not multiple cultures within our organization. We need to make sure people know what to expect of us; there is no Triad, and there is no Quorum. There is just one."
Some of the changes Quorum's hospitals can expect are modifications to their local boards; Triad has a history of having fewer corporate representatives and more local members than Quorum had on its local boards, Shelton said. And Triad has a more formal process for including local physicians in its decisionmaking, with monthly physician leadership meetings in each market.
Shelton said he still plans to divest two or three more hospitals and would like to acquire two to three more per year. Within five years, he envisions Triad as a company with 60 to 65 hospitals, he said.