The other shoe dropped last week in the cardiology market of Austin, Texas.
Growing in Austin
St. David's-HCA venture buys MedCath hospital
Just six weeks after St. David’s HealthCare acquired a major cardiologist practice, that joint venture of HCA and the not-for-profit St. David’s Foundation announced that it was purchasing 58-bed Heart Hospital of Austin from MedCath Corp., Charlotte, N.C., and physician investors. Those investors include Austin Heart, the cardiology practice that the St. David’s partnership acquired on Dec. 31, 2009. Georgetown (Texas) Healthcare System is also a St. David’s HealthCare partner.
St. David’s agreed to pay $83.6 million for the hospital, according to MedCath, which owns a 70.9% stake in the hospital. Physician investors own the remaining 29.1% stake.
David Laird, president and CEO of the heart hospital, said the sale of Austin Heart to St. David’s wasn’t the only factor in the sale, but it had an effect. “We found ourselves at a strategic crossroads,” Laird said. “We could have fought the good fight by ourselves for the foreseeable future, but it was going to be tough not to be directly aligned with the primary group.”
Keeping aligned with physicians is becoming more and more important for a hospital to be successful, Laird added: “The future is going to be for those systems that are larger in nature and have some vertical integration in them.”
For the St. David’s partnership, Austin Heart’s interest in clinical and financial integration meshed well with the partnership’s emphasis on cardiovascular care, said Jon Foster, president and CEO of the partnership. Austin Heart includes 47 physicians at locations across a wide geographic area that complements the partnership’s six hospitals and other facilities, Foster said. “We don’t have the capacity at our hospitals to accommodate all of the Austin Heart patients,” Foster said.
In the Austin Heart deal, St. David’s took on the 300 nonphysician employees of the practice, and also formed a new not-for-profit corporation to employ the physicians, as required by Texas law, Foster said. St. David’s is the sole member, or owner, of this organization, but only physicians can sit on its board, and they control all employment and clinical matters, again as required by the state law, Foster said. Austin Heart physicians will continue to practice at other hospitals, too, including the competing Seton Family of Hospitals, the Austin system that is part of Ascension Health, St. Louis.
The sale of the heart hospital is subject to federal antitrust review and other regulatory requirements, and it is expected to close by June 30, according to MedCath.
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