HCA has entered into a nonbinding memorandum of understanding to buy out the Colorado Health Foundation's 40% share of HealthONE, the Denver-based joint venture, for $1.45 billion.
HCA to buy remaining stake in Colo. joint venture for $1.45 billion
Formed in 1995, HealthONE has seven hospitals and 13 ambulatory surgery centers in the Denver area that have 8,700 employees and 3,000 affiliated physicians.
The deal is subject to regulatory review and is expected to close in the third quarter, according to an HCA news release.
In a Colorado Health Foundation news release, it was stated that the organization will use the proceeds from the deal to purchase a “diversified and more stable” investment portfolio that will allow it to continue its mission of increasing the state's insured population and its access to care “in perpetuity.”
“We're going to continue to do what we're already doing,” said Anne Warhover, Colorado Health Foundation president and CEO, in an interview explaining that the cash from HCA may not necessarily lead to the organization spending more each year, but “it will allow for the certainty of investing in more years to come.”
Terms of the proposed deal include establishment of an independent board and continuation of HealthONE's indigent care and graduate medical education programs.
Gary Drews, Colorado Health Foundation's chief financial officer, said HCA is committed to maintaining the HealthONE level of charity care for 10 years as well as continuing its program of providing discounted care for the uninsured.
The foundation partners with the University of Colorado and HealthONE to support five medical residency programs, which graduate 30 physicians each year from two family medicine programs and programs in internal medicine, podiatry and a “transitional year” residency program for new medical school graduates.
Drews said the deal calls for keeping the current programs in place for at least five more years while “exploring the next vision of what these residencies could be.” He said the current programs are based on both healthcare and medical workforce development needs.
Warhover said the governing board will have 16 members serving staggered, three-year terms with HCA appointing eight and the foundation initially appointing eight. After the terms expire for the first eight appointees, however, the foundation will no longer have a say in the board's makeup.
Warhover also emphasized that the foundation is not selling because of unease over the healthcare system's ability to continue as a funding source for the foundation's programs, but out of a desire to not have so much of the foundation's assets concentrated in one place.
“It's really not specifically about the hospital system, but more about the fundamentals of portfolio management and diversification,” she said of the deal.
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