Triad Hospitals, Dallas, announced plans last week to sell at least two more hospitals inherited last month with its acquisition of Quorum Health Group: 110-bed Doctors Hospital of Stark County, Massillon, Ohio, and 183-bed Summit Hospital, Baton Rouge, La.
Triad disclosed the divestiture plans while announcing first-quarter net income of $7.8 million, or 22 cents per share, down slightly from $8 million, or 25 cents per share, in the year-ago period. For the quarter ended March 31, when Triad had only 29 hospitals, revenue jumped 17% to $365.8 million.
Following its acquisition of Quorum last month, Triad's hospital count has jumped to 49. Less than a week after completing the acquisition, Triad announced completion of its first Quorum divestitures. It sold 160-bed UniMed Medical Center in Minot, N.D., and 42-bed Kenmare (N.D.) Community Hospital to Trinity Health, owner of the only other acute-care hospital in Minot, for $46 million. That two-hospital sale brought Triad's hospital count down from 51. Like the North Dakota facilities, the hospitals in Ohio and Louisiana were Quorum facilities.
Triad Chairman and Chief Executive Officer James Shelton said there are potential buyers for the hospitals in Ohio and Baton Rouge but didn't disclose their identities. The company would like to sell the Ohio hospital to a local provider partly because physicians have expressed a preference to partner with another hospital with more-favorable managed-care contracts, Shelton said. The hospital in Baton Rouge has struggled and would take too long to turn around, he said.
Triad still is considering an outright sale of Quorum's hospital management unit, Quorum Health Resources, although Triad may maintain partial ownership of the subsidiary for tax purposes, Shelton said. The company's financial projections assume that the subsidiary, which has 200 hospital management contracts in 43 states, will be sold by year-end. Triad officials have said previously that they hoped to sell it by midyear.
"What I don't want to do is spend 80% of my time on 5% of our earnings," Shelton said of the hospital management business during an analysts' conference call. "I think there may be some ways to look at this business and stay involved in some way and not take the lead."
While it pares down holdings in some markets, Triad plans to expand in other markets. The company's hospitals in Huntsville, Ala.; Tulsa, Okla.; and Tucson, Ariz., have reached capacity, and in each market Triad is working on expansion projects, Shelton said.
In an unrelated development, LifePoint Hospitals, Brentwood, Tenn., which was spun off from HCA-The Healthcare Co. along with Triad in May 1999, got some good news as Moody's Investors Service upgraded $360 million of LifePoint's debt securities.
The upgrades reflect the rural hospital company's strong operating performance and its recent $100 million secondary stock offering, which LifePoint is using to repay debt, Moody's said. LifePoint owns 21 rural hospitals. The ratings agency upgraded LifePoint's senior secured credit facilities to Ba3 from B1, its senior subordinated notes to B2 from B3, its senior implied issuer rating to Ba3 from B1 and its senior unsecured issuer rating to B1 from B2.