HMA to begin negotiations with Bert Fish Medical

Health Management Associates is on its way to forging its third deal this year after it was selected to begin negotiations with Bert Fish Medical Center, New Smyrna Beach, Fla.

The public Southeast Volusia Hospital District chose Naples, Fla.-based HMA over Daytona Beach-based Halifax Health.

The deal comes after Florida has added more oversight of public hospital sales and leases, and also required them to undertake self-evaluations of whether a takeover might be in their best interest. It's also the epilogue of the bungled deal between Bert Fish and Adventist Health System. Bert Fish's charitable foundation had successfully sued to stop that deal—arguing that it had been inked in secret and the process was biased in favor of Adventist—which prompted the measure for more openness on hospital takeovers.

In a proposal submitted in March, HMA said it would pay $52.6 million to assume the lease and supply inventory for 112-bed Bert Fish. The publicly traded hospital company also proposed spending at least $15 million on capital improvements (PDF) over the first five years, and $40 million over 10 years.

HMA estimated that Bert Fish's conversion from a tax-exempt to tax-paying entity would provide $15 million in new tax revenue to the community. The chain proposed operating the hospital under an 80/20 joint venture structure with the hospital district.

Halifax, in contrast, proposed a deal where it would pay $38.4 million for the hospital, with $35 million in capital commitments during the first five years, and $30 million in years six to 10.

HMA has a large presence in Florida, with 21 hospitals in the state, as well as a statewide clinical affiliation with the University of Florida's Shands Hospital.

The hospital company's battle with hedge fund Glenview Capital Management, which Tuesday nominated a new slate of directors to replace HMA's current board, has not knocked it off the acquisition trail. Analysts have viewed its recent deal-making success as a vote of confidence.

In April, HMA beat out Duke LifePoint in its bid for 420-bed Munroe Regional Medical Center in Ocala, Fla., and the two parties signed a letter of intent this month to pursue a long-term lease agreement.

Also in April, it finalized an 80/20 joint venture with Bayfront Health System to operate 395-bed Bayfront Medical Center.

Follow Beth Kutscher on Twitter: @MHbkutscher