As bidding for five-hospital Baptist Health System, San Antonio, heats up, the battle is rekindling rhetoric against investor-owned hospitals by a not-for-profit critic.
In the next few weeks, Community Health Corp., Addison, Texas, will make a proposal to the Baptist board meant to preserve the system’s faith-based mission and not-for-profit status, said Mike Williams, president and CEO of the company. Thirteen Texas-based members of VHA formed Community Health five years ago with the express “mission to preserve community-based, not-for-profit hospitals,” Williams said.
Community Health was drawn into the fray by a partnership to acquire the Baptist system between Tenet Healthcare Corp., the second-largest investor-owned chain in the nation, and Christus Health, a 20-hospital Roman Catholic system based in Irving, Texas, Williams said. Tenet, based in Santa Barbara, Calif., and Christus Santa Rosa Health Care, the San Antonio affiliate of Christus Health, formally announced their partnership this morning.
Initially Christus Santa Rosa had negotiated with Baptist on its own. In April, Vanguard Health Systems, Nashville, emerged as another contender; it continues to pursue a purchase of Baptist that would “help them preserve their identity and mission,” Vanguard spokesman Trip Pilgrim said. “Our efforts haven’t changed a bit.”
Negotiations have been tangled. Christus Santa Rosa and Baptist engaged in eight months of exclusive merger talks, but they broke off the exclusive nature of the talks in March because Baptist was not satisfied with the progress made, said Earl Cutler, Baptist’s board chairman. Then in April Baptist and privately held Vanguard announced that they had agreed to 60 days of exclusive negotiations--exclusive of all other bidders except Christus Santa Rosa, that is.
Vanguard agreed to waive the exclusivity provision to allow Tenet to make an offer. Tenet began conducting due diligence on the Baptist system on Monday, and then Christus Santa Rosa and Tenet informed Baptist on Tuesday that they planned to make a joint offer, Cutler said. Vanguard remains a viable option, he said.
If the Tenet-Christus Santa Rosa partnership succeeds in buying Baptist, each partner would own 50% of the Baptist hospitals and 527-bed Christus campus.
Tenet spokesman Greg Harrison said the partnership would provide “some tremendous combined resources that would continue the mission of the hospital and continue to deliver high-quality and lower-cost healthcare services to the entire community, including the underserved.” Tenet operates 15 hospitals with faith-based roots, and Harrison said the company has an “outstanding record of operating both faith-based and nonsectarian hospitals and striking a good balance between compassionate care and efficient operations.”
Community Health’s Williams, however, doesn’t think Baptist, one of the founding members of Community Health, needs to sell to Vanguard or the Tenet-Christus Santa Rosa partnership.
“Baptist has a 35% share of the market in San Antonio; Baptist has strategic locations and they have an excellent physician staff,” Williams said. “There really is no reason that they should have to share the revenue stream with . . . an investor-owned company or give up governance.”
Williams declined to provide details of Community Health’s planned proposal. He did, however, point to the 1999 partnership between two other Community Health members, Memorial Hermann Healthcare System, Houston, and two-hospital Baptist Healthcare System, Beaumont, Texas, as a model. Memorial Hermann manages the two hospitals, and Community Health owns them, but the local Baptist board still controls its hospital’s operations, Williams said.