Triad Hospitals is still weighing whether to sell or keep the hospital management business it inherited when it bought Quorum Health Group in April, but at least one bidder has taken himself out of the running.
Joseph Hutts, a former Quorum director and former chairman and chief executive officer of PhyCor, the Nashville-based physician practice management company, told Modern Healthcare that he is no longer interested in buying Quorum Health Resources, the subsidiary that manages about 200 hospitals and has consults with another 100.
Dallas-based Triad mentioned Hutts as a QHR bidder in a Securities and Exchange Commission filing in April related to Triad's $2.4 billion acquisition of Brentwood, Tenn.-based Quorum.
Triad Chairman and CEO James Shelton has said in the past that the company was considering several options, including selling QHR, keeping it, or selling a majority interest but keeping some equity in the company.
Hutts wouldn't discuss his reasons for dropping his bid but said he came to the decision during the past few weeks.
Triad spokeswoman Patricia Ball said she was unaware Hutts was out of the running.
At the end of May, Shelton spoke at a leadership meeting for QHR managers and said he would make a decision within 60 days about whether to keep or sell the company, said Jim Stokes, QHR's president. Triad also released financial projections last month that assumed the company would sell the unit by December of this year.
Stokes and other Quorum managers have expressed an interest in buying the company, which originally was spun off in a 1989 management buyout from Hospital Corporation of America, the precursor of HCA-The Healthcare Co. Only later did QHR branch out and begin buying hospitals.
Stokes said his team is interested in remaining with QHR regardless of whether it remains a part of Triad, which owns or leases 49 hospitals and 14 ambulatory surgery centers in 17 states.
Also involved in the original spin-off of Quorum from HCA was New York investment firm Welsh, Carson, Anderson & Stowe, which still retained a large equity interest in Quorum when Triad bought it. Russell Carson, a general partner at Welsh, Carson, was also at one time an interested bidder in the management company, according to Triad's SEC filings. Carson was Quorum's former chairman and is now a member of Triad's board. Carson said, however, that his firm has opted to pursue other deals instead of trying to buy Quorum's management business to launch a new hospital chain.
Triad could benefit from maintaining a minority interest in QHR because the company could defer some gain on the sale and therefore reduce its immediate tax liability, said a source involved in the negotiations, who asked not to be named. zxxx
In the meantime, Quorum employees are eager to know what their future holds.
"It's been really difficult for people to manage a day-to-day business and sales relationships without knowing," said Susan Hassell, a QHR spokeswoman. "It's something that needs to be resolved for everyone's peace of mind."
"I was one of the original management group that was involved when we bought our company in 1989 from HCA," Stokes said. "(A management buyout) was the approach we took at that time. We'd certainly hope that if a divestiture is done, that we'd have that approach again."