Vanderbilt University Medical Center hopes to further expand its reach outside of Nashville by buying a 245-bed hospital in Lebanon, Tenn., from Community Health Systems.
Tennova Healthcare, a subsidiary of Franklin, Tenn.-based CHS, signed a definitive agreement with Vanderbilt to sell its Lebanon hospital, about an hour's drive from Nashville. The providers expect the deal to close in the third quarter of 2019, pending regulatory approvals and closing conditions.
The deal, the terms of which were not released, includes the two-campus facility and its related businesses, including physician clinic operations and outpatient services.
In a news release, VUMC wrote that patients will not experience interruptions in care, and leaders with both systems will ensure a smooth ownership transition.
"This hospital is an important addition to our health system as we continue to increase its size and scale to meet the needs of Middle Tennessee's rapid growth and the diverse population we serve," Dr. Jeff Balser, VUMC's CEO and dean of Vanderbilt University School of Medicine, said in a statement. "Central to our mission as an academic medical center, we will be able to bring new clinical services and other initiatives, such as programs in population health, to the citizens of Wilson County and surrounding communities, improving health throughout the region."
VUMC said it is committed to hiring "substantially all" of the hospital's employees who are in good standing when the ownership transfer is complete. The hospital currently employs about 600 administrators, nurses and support personnel, VUMC said. More than 200 community physicians work in the hospital. John Howser, a spokesman for VUMC, could not say how many of those physicians are employed by the hospital, but said it's a small number.
Tennova Healthcare-Lebanon reported a $2.8 million operating loss in 2017 on about $84 million in total operating revenue, yielding a negative 3.4% operating margin, according to Modern Healthcare Metrics. The facility's operating margin took a dive in 2015 after exceeding 7% in 2014.
Metrics data also show its occupancy rate declined from 48% in 2014 to 44.3% in 2017. During that time, its labor cost as a percentage of operating revenue went from 33% to 41%.
VUMC said the acquisition will boost its presence in four of the state's fastest growing counties: Davidson, Rutherford, Williamson and Wilson. The acadmic medical center is also building a 37,500 square-foot facility in Rutherford County that will be part of Monroe Carell Jr. Children's Hospital at Vanderbilt.
In 2017, the hospital admitted more than 5,000 patients and provided more than 65,000 outpatient visits, according to VUMC. Its providers performed nearly 6,700 surgeries and delivered more than 600 babies that year.
Dr. C. Wright Pinson, VUMC's deputy CEO and chief health system officer, said in a statement that VUMC needs to provide additional resources outside of its academic medical center like those provided by the Lebanon hospital.
The hospital will celebrate its 40th anniversary of service in Wilson County on April 1.
CHS, which declined to comment beyond its news release, said Tennova Healthcare-Lebanon was among the planned divestitures discussed on the company's fourth quarter 2018 earnings call.