Hurricanes and investigations aside, some for-profit hospital chains are doing their part to push the pace of hospital merger and acquisition activity this year. Two nonurban hospital chains -- Community Health Systems, Brentwood, Tenn., and Health Management Associates, Naples, Fla. -- announced separate agreements to acquire hospitals in states in which they have significant holdings. Both of the hospitals being sold were independent not-for-profits that decided they no longer had the financial strength to upgrade their plants, equipment and technology.
Community executed a definitive agreement to buy 161-bed Bradley Memorial Hospital, Cleveland, Tenn., for $76.5 million upfront and committed to invest $36.8 million in the hospital over five years, said Dewayne Belew, chief operating officer at Bradley Memorial. Community already operates the town's only other hospital, 73-bed Cleveland Community Hospital, and 10 other hospitals in the state; in all it owns or operates 69 hospitals in 21 states. The company said it expects to complete the acquisition of Bradley Memorial in early October.
Bradley Memorial sought buyers because it lost money in six of the past 11 years and faced well-capitalized competition in the crosstown hospital owned by Community, a physician-owned ambulatory surgery center and Chattanooga's hospitals, which are about 45 minutes away by car, Belew said.
Meanwhile, 95-bed Gilmore Memorial Hospital, Amory, Miss., said HMA signed a letter of intent to acquire the not-for-profit hospital for $45 million and pledged to invest $18 million in the facility. Nine of HMA's 57 hospitals are in Mississippi. The company operates in 16 states overall. Gilmore Memorial said it expects to reach a definitive agreement with HMA within two months. Subject to regulatory approvals, including a certificate of need, the deal would close by year-end, the hospital said.
In a news release, Gilmore Memorial said it faces competition from much larger regional systems, requiring the stand-alone hospital to find a strong partner. Chief among these rivals, although not mentioned by name, is North Mississippi Health Services, a six-hospital system based in Tupelo, Miss., which is about 32 miles northwest of Amory. Also last week, Specialty Hospitals of America, Portsmouth, N.H., a management firm formed in 2002, said it intends to make 35-bed MedLink Hospital and Nursing Center, a long-term acute-care hospital in Washington, D.C., its first purchase. Terms weren't disclosed. The deal requires local regulatory approval, which the companies said they expect in 30 days to 60 days.
-- with Tony Fong