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Baptist Health Care to Pay $245 Million for HCA's West Florida Hospital

John Commins, for Florida Healthflash, July 3, 2008

Baptist Health Care will purchase the 531-bed West Florida Hospital from HCA for $245 million. The deal, announced Thursday, is still subject to financing and regulatory approvals, but it is expected to be finalized by the end of the year.

When the deal is finalized, West Florida Hospital will be renamed Baptist Hospital, and together with nearby Baptist Medical Park— 9 Mile will give Baptist Health Care a larger presence in north Pensacola. "We've been trying to get a footprint in that area for 10 years," Baptist Health Care President and CEO Al Stubblefield says. "We tried to get a (certificate of need) to put a hospital just north of where this hospital is unsuccessfully four different times. This is a way to be able to branch out into that growing part of our market without having to invest in a new hospital."

West Florida Hospital is about 30 years old but recently underwent an expansive renovation. "It's got brand new operating rooms, a front lobby, exteriors. Physically it is in great shape," Stubblefield says.

Baptist and HCA officials say West Florida Hospital and the 492-bed Baptist Hospital provide too many redundant services for a competitive market serving about 250,000 people. "It just made sense with the thought that streamlining some of the services and personnel technology and equipment would bring some economy of scale to the area," says Kendrick Doidge, vice president of marketing and public relations at HCA's West Florida Healthcare.

Stubblefield agrees. "Basically you have two 500-bed, full-service hospitals, two open heart programs, two cancer programs, two neurodiagnostic and neurosurgical programs, and two trauma programs," he says. "The hospital we are acquiring is running 30% occupancy and yet they're trying to keep all of those high-end programs up and going. We estimate there is $50 million to $60 million in costs that we can take out of the system in the first full year of consolidation."

Stubblefield says there will be some job losses but he doesn't anticipate mass layoffs. "The business plan calls for about 300 less employees when the dust settles than what we have combined today," he says. "But that is an 18-month window and we expect the vast majority of that to happen through attrition in that time frame."

When the sale is completed, HCA's West Florida Healthcare will be left with four hospitals in Fort Walton, Panama City, Tallahassee, and Niceville.

John Commins