Scripps in talks to acquire El Centro

Scripps Health, San Diego, is in talks to acquire El Centro (Calif.) Regional Medical Center. The deal, if completed, would add the system's fifth hospital in its Southern California market.

Chris Van Gorder, Scripps' president and CEO, described the Imperial Valley as a farming region that is largely served by community hospitals and is challenged by an adverse payer mix. But in bringing El Centro Regional into its network, both organizations gain economies of scale, he said.

“We already get a lot of their patients, and have historically,” he added. “A lot of their tertiary and quaternary care comes into San Diego.”

The city of El Centro in May hired financial adviser Hammond Hanlon Camp to sell or lease the 165-bed medical center. Although a financial report indicates that the hospital has enough cash on hand to pay its current obligations, El Centro Regional has been on a building spree in recent years that has increased its debt.

In its fiscal year ended June 30, 2012, the most recent available, El Centro saw a 33.1% increase in total liabilities, or $6.2 million in new debt. Most of the increase was related to a $4.5 million line of credit that was used to finance an outpatient center, according to the financial report.

Other projects included expanding and remodeling its emergency room and triage areas. In addition, it spent about $800,000 on medical equipment and $1.8 million on information technology.

El Centro also was coming off a challenging year in fiscal 2011. Its operating income more than doubled in fiscal 2012, to $12.5 million from less than $6 million the previous year. Operating income increased 15.3% to $133.5 million.

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