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Capella, AL, Hospital Sold to Rival, Will Close

John Commins, June 4, 2009

Cullman Regional Medical Center in Cullman, AL, has purchased for-profit rival Capella Healthcare Inc.'s nearby Woodland Medical Center, and will shutter the 100-bed hospital next month, the Healthcare Authority of Cullman County announced this week. Terms of the sale were not disclosed.

Once the purchase is completed on July 15, CRMC says it will suspend operations at Woodland and consolidate all operations at CRMC while it explores the future use of the Woodland campus. Woodland, which had been averaging 24 in-patients per day, will no longer operate as a medical and surgical acute-care hospital after the deal is completed.

The agreement comes after years of consideration by the hospitals. The 115-bed CRMC, built in 1995, and Woodland have been marginalized over the years; Woodland operates at about 25% capacity and CRMC at 65%.

"Combining the two hospitals, instead of having us compete with each other, allows us to focus the investment of our healthcare dollars improving the quality of hospital care for the families we serve throughout Cullman County," says Stephen Donaldson, chairman of the healthcare authority, which oversees CRMC. "These additional resources will allow CRMC to add services, invest in new medical technology, recruit new physicians, and more."

The move impacts approximately 150 employees at Woodland, some of whom will have jobs at CRMC. Some employees will remain at Woodland to help the suspension and conclusion of services. It was not immediately clear how many Woodland employees would be laid off when the deal is finalized.

"While a combined hospital system for Cullman is absolutely what is best for our community and for our patients, this was not an easy decision to make," says Woodland CEO Butch Naylor. "We will be working closely with CRMC to make sure every Woodland employee is assisted through the transition."

With the sale, Franklin, TN-based Capella will now operate 13 hospitals in seven states. Capella spokeswoman Anne S. Hancock says the hospital chain "is not even remotely considering selling any of our other 13 hospitals. We made the tough decision because we know one combined, strong hospital is right for patients and for the community in the long-run," Hancock says. "This decision came after months and even years of conversations between the two hospitals about ways to partner."

Donaldson says the consolidation is part of a growing trend among small-market hospitals. "In today's economy and with all the healthcare reform going on in Washington, DC, hospitals must find smarter, better and more efficient ways to make use of dwindling resources while continuing to provide top quality care," he says.


John Commins is an editor with HealthLeaders Media. He can be reached at jcommins@healthleadersmedia.com.

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