It's no wonder HCA announced more than a year ago that it was shedding 10 small hospitals in rural markets. The company hasn't been getting a neighborly greeting in Mayberry, R.F.D., lately.
The Nashville-based company was pushed out of 60-bed Brunswick Community Hospital, Supply, N.C., earlier this year because the company didn't see eye-to-eye with physicians and community leaders about whether population growth justified an expansion of the hospital (March 6, p. 24). HCA doesn't have to be pushed out of Putnam General Hospital, Hurricane, W.Va. -- it has been trying to sell it for more than a year -- but a local group is fighting the company's plans, announced last week, to end inpatient services at the 68-bed hospital effective Aug. 29. HCA doesn't need regulatory approval to end inpatient services, but it does need approval for something else it plans to do: convert the building into an urgent-care center.
The changes at Putnam are "totally unrelated" to the leveraged buyout of the company announced last month (July 31, p. 8), HCA spokesman Jeff Prescott said. The leveraged buyout group's strategy does not rely on cost-cutting or layoffs to achieve the investment returns they are expecting, Prescott said. Private equity groups, the founding Frist family and company management have agreed to buy HCA for $20.8 billion and the assumption of $11.7 billion in debt. HCA owns or operates 176 hospitals.
HCA said Putnam General's inpatient services have become unprofitable because of a series of malpractice lawsuits filed against the hospital and a former physician, John King. The lawsuits and comments made by the lawyers who filed them have amounted to "an ongoing campaign that has unfairly discredited our employees and affiliated physicians," said Margaret Lewis, president of HCA's Capital division, based in Richmond, Va.
Lawyers for more than 100 former patients accused King of performing unnecessary orthopedic procedures. Their lawsuits additionally named the hospital as a defendant for granting King privileges. The Internal Revenue Service also has subpoenaed the hospital for billing records related to King, the Associated Press reported.
In a statement, lawyers from two of the firms representing the plaintiffs said, "HCA's management is to be held accountable for poor credentialing and privileging practices that put those patients in harm's way."
The lawyers also contend that there are local not-for-profit hospitals that would buy Putnam General. Bob Gray, vice president of Thomas Memorial Hospital in South Charleston, W.Va., said his 216-bed hospital was in discussions last week with HCA about buying the facility. Thomas Memorial already serves more patients from Putnam County than any other hospital, and most physicians who practice at Putnam General are on staff at Thomas Memorial, too. If Thomas Memorial is successful in purchasing the hospital, Gray said, the intention is to operate it as an acute-care hospital and invest any proceeds in the building and equipment.
LifePoint Hospitals, Brentwood, Tenn., had agreed to purchase Putnam General as part of a five-hospital, $330 million deal announced in July 2005. The plaintiffs' lawyers tried to block the sale, but the West Virginia Health Care Authority dismissed their intervention and provided certificate-of-need approval for the sale. Putnam General's deteriorating financial condition, however, led to its exclusion from a renegotiated four-hospital, $254 million deal between the two companies that closed July 1.