Bon Secours Health System put another struggling operation on the block last week.
The Mariottsville, Md.-based Catholic system said it is exploring the sale of its Michigan assets: its financially ailing two-hospital joint venture with Detroits Henry Ford Health SystemBon Secours Cottage Health Services, in Grosse Pointe; a St. Claire Shores nursing home; and a joint venture assisted-living facility, also in St. Claire Shores. Fifteen-hospital Bon Secours has a majority stake in both co-owned enterprises; it holds 70% of Cottage Health Services and 80% of the St. Claire Shores assisted-living facility, of which Life Care Services, Des Moines, Iowa, owns the remaining 20%.
The planned sale of its Michigan operations is the latest move in Bon Secours bid to improve finances and operations through divestiture after the systems expansion earlier in the decade (Feb. 14, 2005, p. 6). Since 2004, Bon Secours has sold or announced plans to sell operations in Florida, New Jersey, Pennsylvania and Virginia, divestitures that boosted its cash by $70 million and cut its debt load by $192 million, according to Moodys Investors Service.
Bon Secours agreed to sell its last New Jersey healthcare facility, 313-bed St. Mary Hospital in Hoboken to the Hoboken Hospital Authority in a deal expected to close by Jan. 31.
The decision to sell its Michigan operations was relatively recent. As of March 2005, Bon Secours officials said a sale was not imminent. It was steady losses at Cottage Health Services that prompted Bon Secours decision, said Katherine Arbuckle, Bon Secours chief financial officer. The joint venture, which includes 221-bed Bon Secours Hospital, Grosse Pointe, and 54-bed Cottage Hospital, Gross Pointe Farms, lost $15 million in fiscal 2006, which ended Aug. 31; $8.1 million in 2005; and $18.3 million in 2004, according to figures provided by Bon Secours.
Prospective buyers already have submitted bids, none of which are binding agreements, Arbuckle said. Bob Riney, chief operating officer at four-hospital Henry Ford, said: Were open to evaluating any and all options that make the most sense. Though a co-owner, Bon Secours is liable for all losses between September 2004 and August 2009 under a deal it reached with Henry Ford in the wake of accounting irregularities that forced restatement of the subsidiarys 2002 earnings.