A local hospital authority in northern Alabama is going head-to-head against Birmingham-based Baptist Health System in an attempt to gain total control of 115-bed Cullman (Ala.) Regional Medical Center.
The Healthcare Authority of Cullman County, which evenly shares ownership of the facility with the state's biggest healthcare system, has hired a high-powered team of outsiders to help jump-start negotiations that have now been in limbo for nearly a year and a half.
Among those hired by the volunteer hospital authority to negotiate a deal was Joshua Nemzoff, a consultant who filed a $4 million federal lawsuit last year charging Baptist and its president, Beth O'Brien, with breach of contract and defamation. Baptist, which settled the lawsuit out of court, now must bargain with its former adversary over the hospital's future.
The nine-member hospital board, which voted unanimously on this aggressive new bargaining ploy late last month, also hired Joe Sowell, a healthcare lawyer, and David Jarrard, a veteran public-relations operative who once represented Baptist and worked for the system on a freelance basis during the first failed negotiations between Baptist and the local hospital authority in February 2004. (Jarrard's consulting firm described Nemzoff's lawsuit as "frivolous" at the time.)
Nemzoff, a consultant specializing in mergers and acquisitions, will lead negotiating efforts as "project director" for the board.
Steve Glasscock, chairman of the Hospital Authority of Cullman County, said Nemzoff and Jarrard seemed a good fit because of their experience and intimate knowledge of the local healthcare market in Alabama--and Baptist in particular. "We met both of them when negotiations were going on," Glasscock said. "We thought they were good people--very forthright. We felt we needed people like them. We felt like we had to have some professional help because the talks were stalled for some time."
Baptist kicked off the process early last year by offering to buy out the hospital board's 50% share in the not-for-profit hospital. Instead, the hospital board made a bid to buy out eight-hospital Baptist, offering to pay the system the same price it had offered. Baptist balked, then set a higher price than it had offered. Since then, negotiations have stalled. Neither side has provided financial figures because of confidentiality agreements.
"The most troubling thing," Glasscock said, "is that the amount they offered us to buy our share is the same as the price we tried to offer. They refused it, saying it's not a fair price. That has been troublesome and very frustrating to the board."
A Baptist spokesman declined to comment on the situation other than to say that "there's a conversation" continuing about a potential deal between the two partners.
Glasscock said the local authority is determined to keep the hospital under local control, citing concerns that Baptist has retrenched around its core market in Birmingham, about 60 miles south of Cullman. Baptist, he said, has indicated that it plans to focus on that big-city market and does not intend to "put any more money" into the medical center, which was built in 1995 through a partnership of the two groups.
As part its repositioning over the past year, Baptist has shed two hospitals--101-bed Coosa Valley Baptist Medical Center in Sylacauga and 37-bed Lawrence Baptist Medical Center in Moulton. It also announced in late May that it plans to sell two other facilities--106-bed Citizens Baptist Medical Center in Talladega and 103-bed Baptist DeKalb Medical Center in Fort Payne as part of its focus on the hospitals in and around the Birmingham area. That includes a partnership in the development of a replacement hospital for 409-bed Montclair Baptist Medical Center with for-profit Triad Hospitals.
Baptist is also negotiating with HealthSouth Corp. to buy that company's so-called digital hospital in Birmingham, which is being viewed as a potential replacement site for the Montclair facility.