Prime announces two not-for-profit transactions

For-profit hospital chain Prime Healthcare Services, Ontario, Calif., donated Huntington Beach (Calif.) Hospital to an affiliated not-for-profit foundation, Prime Healthcare Foundation, Prime announced.

In a separate transaction, the Prime foundation acquired a controlling interest in Knapp Medical Center, Weslaco, Texas, for roughly $110 million, according to a news release. Both Prime Healthcare Services and Prime Healthcare Foundation are overseen by Dr. Prem Reddy, chairman and CEO of the for-profit organization and founder of the not-for-profit.

As part of the Knapp transaction, Prime will contribute roughly $100 million in cash and donated investments toward the creation of the Knapp Community Cares Foundation, which will seek to expand and improve access in the area, and has committed $10 million to capital improvements at the hospital, according to the news release.

Terms of the Huntington Beach Hospital's conversion to a not-for-profit were not disclosed, though a news release noted that the hospital will be transferred free of debt.

The conversion of 130-bed Huntington Beach Hospital into a not-for-profit and the acquisition of 202-bed Knapp by Prime's not-for-profit organization are part of a plan to create dual for-profit and not-for-profit systems, said Edward Barrera, spokesman for Prime. The two Prime-affiliated organizations operate 20 acute-care hospitals in four states, according to Prime.

Prime has said it plans to grow aggressively through acquisitions in 2013.