Community Health Systems to lease Munroe Regional Medical Center

Community Health Systems has signed an agreement to lease Munroe Regional Medical Center, a 420-bed hospital in Ocala, Fla., committing to an investment of about $425 million over the initial five years of the 40-year lease.

CHS will pay about $200 million to operate Munroe through a 40-year lease, and invest $150 million in capital improvements for its healthcare facilities. Another $75 million will be invested in equipment, physician recruitment and new services over the first five years of the transaction.

The lease will begin in the second quarter, pending regulatory approval.

The Franklin, Tenn.-based chain is executing a deal set in motion by Health Management Associates, which it acquired in January in a $3.9 billion transaction. HMA last April outbid Duke LifePoint Healthcare with an offer for Munroe Regional that included $212 million in cash and $225 million in capital commitments over the first five years and 4% of net revenue in years six to 10. The chain also pledged $1.5 million in charitable donations.

The two parties signed a letter of intent in June.

The deal also calls for Munroe Regional to form a clinical affiliation with UF Health Shands Hospital, a longtime HMA partner. The deal will bring CHS' hospital count to 26 in Florida.

Follow Beth Kutscher on Twitter: @MHbkutscher