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Health & Hospitals

Apr. 20 – UPDATED: Memorial board and Chatham County Hospital Authority sign Letter of Intent with HCA to acquire hospital's assets

 

PHOTO:  The Chatham County Hospital Authority at a recent meeting.

By Lou Phelps, Savannah Business Journal

April 20, 2017 – 8:00 p.m. - The Chatham County Hospital Authority and Chatham County officials appear to have won the day in finding a better deal to secure the future of Memorial Health University Medical Center. 

The Board of Directors of Memorial Health, Inc., board over the umbrella corporation of the Memorial Health hospital system, and a long  list of corporations including real estate holdings, has unanimously agreed to pursue an offer by Hospital Corporation of America (HCA) to purchase all assets of the hospital system for a total package stated to be a $710 million offer.  

HCA hospital corp is headquartered in Tennessee.  The proposed deal was previously approved by the Chatham County Hospital Authority in a deal with an unnamed suitor, and includes provisions to the Hospital Authority sought to protect Memorial's ability to care for indigent patients. The deal will also add operating cash for Memorial, if the deal closes. 

The HCA mega-hospital system has 233,000 employees, 37,000 active physicians and 79,000 nurses, the company states on its website.  HCA has also wonder numerous awards aa a top “ethical” company. 

The deal includes the agreement to immediately pay off the $160 million in bond obligations underwritten by Chatham County, as well as other loans on the Memorial balance sheet.  This will allow Chatham County to reduce its overall bond obligations, and therefore be able to increase its borrowing ability. 

And, in their offer, HCA has agreed to maintain Memorial’s Level 1 trauma unit and to maintain the current contractual partnership with the Mercer University School of Medicine that has a campus at Memorial. 

Other previously announced capital investments, including building a new children’s hospital,l is also guaranteed in the offer, though no specifics were released during the Due Dilligence period. 

Like the prior deal considered by the Memorial board with Novant, HCA has agreed to invest $280 million in total over the next 10 years in capital improvements, explained as $100 million in new capital improvements, and $180 million in necessary upgrades to existing capital asssets. 

HCA and Memorial have signed a Letter of Intent which gives HCA a 60-day due diligence period to decide whether to move forward.  A close by the end of 2017 is expected, according to County officials. The hospital system is currently being operated by an Interim CEO Kerry Watson.  

The Memorial board has had a committee reviewing possible investors or purchasing firms, as has the Chatham County Hospital Authority, efforts that resulted in a "joint" process in the last few months, according to both groups.  A county official who asked not to be identified said that negotiations between Memorial and the County "have improved," under Curtis Lewis's leadership, Memorial's new Chairman of the Board who took over in February.  

There are other differences ib this proposed deal, versus the Novant proposal last year:  a portion of the purchase price will go the County Hospital Authority for the development of an indigent care trust fund. The specifics of how the fund will operate is not yet decided.  Memorial hospital’s charter from the 1950’s  established the hospital to insure the care of the county’s indigent.

Dr. Frank Rossiter Jr., chairman of the Chatham County Hospital Authority, has made clear that the Authority was seeking a partner for the hospital that addressed indigent care. 

About Hospital Corporation of America

HCA Holdings, Inc. (NYSE: HCA) is a publicly traded hospital corporation, headquartered in Tennessee.  It's South Atlantic division is headquartered from Charleston, SC.

The company’s 1st Qtr. 2017 operating results were released Monday, and showed $10.623 billion in revenue compared to $10.260 billion in the first quarter of 2016.

Net income attributable to HCA Holdings, Inc. for the first quarter is expected to approximate $659 million, or $1.74 per diluted share, compared to $694 million, or $1.69 per diluted share, in the first quarter of 2016.

Adjusted EBITDA for the first quarter of 2017 is expected to approximate $2.005 billion compared to $2.003 billion in the previous year’s first quarter. Adjusted EBITDA is a non-GAAP financial measure.

The hospital corporation has been an acquisition mode for a number of years.

Same facility admissions for the first quarter of 2017 increased 1.2 percent, while same facility equivalent admissions increased 1.6 percent when compared to the first quarter of 2016. Same facility emergency room visits for the first quarter of 2017 increased 1.1 percent from the prior year’s first quarter.  Memorial University Medical Center has been tracking at higher patient growth rates.

HCA’s Results for the first quarter of 2017 were affected by changes in payer mix, according to information provided to investors this week, and the loss of one day when compared to the first quarter of 2016.

Same facility Medicare admissions comprised 48.1 percent of the first quarter 2017 admissions, compared to 47.0 percent in the prior year’s first quarter. In the first quarter of 2017, and same facility managed care/health exchange admissions comprised 27.4 percent of admissions, compared to 28.6 percent in the prior year’s first quarter.

“HCA anticipates reporting its complete financial results for the first quarter of 2017 on, or about, May 2, 2017,” they state. 

Release to Memorials Staff:

Memorial Health Board, Chatham County Hospital Authority Sign Letter of Intent to Join HCA’s South Atlantic Division

SAVANNAH, Ga. (April 19, 2017) – The Memorial Health Board of Directors & the Chatham County Hospital Authority (CCHA) announced today that they have signed a Letter of Intent for HCA to acquire Memorial’s assets and continue its core services to area residents.

“Earlier this year, the Memorial Board and the CCHA commissioned a search for a strategic partner to assume and stabilize the hospital’s operations. A joint committee of the Memorial Board and CCHA conducted an extensive review of potential partners who would be committed to investing in the future of Memorial Health,” said J. Curtis Lewis, III, chairman of the Memorial Health Board. “Memorial is an important community asset that provides critical healthcare access to 35 counties in Georgia and South Carolina, and our Board is excited to find a partner that will complement and support our mission.”

“We believe that HCA’s South Atlantic division is committed, as we are, to ensuring our caregivers receive the support needed to continue delivering world-class care at our elite teaching hospital,” said Frank Rossiter Jr., M.D., chairman of the Chatham County Hospital Authority. “They have demonstrated this not just with words, but in caring for patients in the communities they serve across Georgia and throughout the southeast. HCA has committed to sustaining key Memorial Health services, including pediatrics, neonatal care/level 3 nursery, Level 1 trauma, and the residency education training program.”

Memorial Health and HCA’s South Atlantic division will continue exclusive discussions with the intent to execute a definitive agreement before the end of 2017. Any resulting transactions would need to meet certain regulatory requirements and approvals before they may be completed.

Memorial University Medical Center is a two-state healthcare organization serving a 35-county area in southeast Georgia and southern South Carolina. The system includes its flagship hospital, a 604-bed academic medical center; Memorial primary and specialty care physician networks; a major medical education program; business and industry services; and NurseOne, a 24-hour call center.

HCA’s South Atlantic division is headquartered in Charleston, SC, and operates 11 hospitals in seven communities across Georgia, South Carolina and Florida. In addition to its 10 hospital-based ERs, the division operates eight community-based ERs placing care close to home within communities where it has a presence. The South Atlantic division includes several elite Trauma programs that treat the most severe illness and injury. In 2016, the division treated more than a million patients, solved more than 600,000 emergencies, successfully completed more than 140,000 surgeries and delivered more than 11,500 babies.

 

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  1. Mar. 30 – BIG Victory on a very contentious day: Ben Watson’s ‘Medical Marijuana’ bill passes both bodies; Moves to Gov. Deal
  2. Mar. 22 - Memorial Board of Directors selects Kerry Watson as Interim CEO
  3. Mar. 2 - Enmarket Raised $15,000 for the Partnership for a Healthier America to Help End Childhood Obesity
  4. Mar. 2 - Dr. Chris LeBlanc Announces New Practice
  5. Feb. 23 - St. Joseph’s/Candler breaks ground on new ‘Micro Hospital’ in Pooler to better serve the Region
  6. Feb. 22 – Curtis Lewis to be named Chairman of the Board of Memorial Health Inc. at Thursday meeting
  7. Feb. 22 – County Commissioners to vote on reappointment of Dr. Daniel Deloach to the Hospital Authority
  8. Feb. 17 – Memorial reports $18.7 Million cash loss, books a $43.9 Million accounting loss, and Al Scott isn't happy
  9. Feb. 14 - Deal applauds legislature on passage of SB 70, adding a per bed fee for all hospitals
  10. Feb. 10 – “We are going to need the community’s support,” translation $$$, states Memorial’s board chair
  11. Feb. 8 - UPDATED: Maggie Gill has resigned as CEO of Memorial Health
  12. Feb. 4 - Dr. Frank Rossiter takes helm of County Hospital Authority; Both consultants and bond counsel at Thursday’s mtg.
  13. Jan. 30 – Local professionals invited to Invest Health conference starting Tues.
  14. While Songy Highroads is choice of Trade Center Authority to build new private-investment hotel on Hutchinson Island, the timeline and steps forward in the process still under discussion
  15. Dec. 9 - Supreme Court to hear Northside Hospital case; Impact for Memorial Health

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