Business Roundup: Healthcare M&A Activity Brisk

The reimbursement squeeze on hospitals is on, and healthcare leaders in search of opportunity are finding partners and making deals.

As the new year unfolds and financial challenges mount, hospital executives seeking business opportunities continue to make deals with like-minded organizations.

Duke LifePoint in $120M Deal with Wilson Medical Center
Duke LifePoint Healthcare will form a joint venture with the 294-bed Wilson Medical Center in Wilson, NC, in a deal that includes $120 million in capital investments and resources to strengthen and grow the hospital.

Under the terms, Duke LifePoint would own 80% of the joint venture, while Wilson Medical Center and the community would have a 20% stake. The joint venture would commit to $120 million in capital investments at Wilson Medical Center over the next decade.

Governance of Wilson Medical Center would be shared equally by Duke LifePoint and Wilson through the creation of a 10-member board with equal representation from both organizations. The joint venture would become a taxpaying organization.

Duke LifePoint owns four hospitals, including Maria Parham Medical Center, Henderson, NC; Marquette General Health System, Marquette, MI; Person Memorial Hospital, Roxboro, NC; Twin County Regional Healthcare, Galax, VA; as well as DLP Cardian Partners, a Charlotte, NC-based company that offers hospital-based catheterization labs and mobile catheterization services.

Banner Health to Acquire Casa Grande RMC
Banner Health will acquire Casa Grande Regional Medical Center, a 177-bed, not-for-profit community hospital located about 50 miles south of Phoenix, AZ, the two providers announced jointly. Financial terms were not disclosed.

"CGRMC's mission has always been to make a positive difference in the lives of those we serve through compassion and excellence in patient care. This fits perfectly with Banner's mission as well. Furthermore, joining with Banner allows CGRMC the best opportunity to grow this facility in the long term. We look forward to a bright future," said Rona Curphy, president/CEO of CGRMC.

The deal is subject to regulatory approvals, but is expected to be completed this spring. Banner has also agreed to provide interim funding as needed in order for CGRMC to continue regular operations until the acquisition is complete.

Banner Health President/CEO Peter S. Fine said the acquisition "will build on the strong foundation provided by Casa Grande Regional Medical Center to expand Banner's non-profit mission of excellent patient care to the community of Casa Grande. Community residents can count on the full suite of clinical performance processes and technologies that are the foundation of Banner's ability to provide industry-leading care."

Headquartered in Phoenix, Banner Health is one of the largest non-profit health care systems in the country. The system operates in seven states with assets that include 23 acute-care hospitals, the Banner Health Network, Banner Medical Group, long-term care centers, outpatient surgery centers, and an array of other services.

WellMont Health Weighs Its Options
Kingsport, TN-based Wellmont Health System has begun an evaluation of its strategic options, which executives say may include aligning with another health system.

Wellmont CEO Denny DeNarvaez said health systems across the country are preparing for increasing demands for upgrading information technology, quality mandates, and population health management in an environment of low inpatient volumes, reimbursement cuts, and potential performance penalties under the Patient Protection and Affordable Care Act.

DeNarvaez says the seven Wellmont hospitals serving Northeast Tennessee and Southwest Virginia face a litany of challenges because of extremely low Medicare payment rates and the high volume of Medicaid and uninsured populations, and the recent decisions by state the governors of Virginia and Tennessee not to expand Medicaid.

"As stewards of a valued community resource, our board of directors and leadership team know it is our responsibility to preserve and advance healthcare in our region," DeNarvaez said in prepared remarks.

"Unlike many health systems, Wellmont is fortunate to be in a position of clinical strength and relative financial stability thanks to the great work of our physicians, co-workers and leadership. The board and the administration are committed to continue pursuing all internal options to ensure the financial stability of our health system for the future."

DeNarvaez says the "guiding principles" that will govern the assessment include:

• Significant financial strength to advance medical, technological and organizational innovation and to develop new care models
• Optimization of information and medical technology systems
• A robust physician network and physician recruitment capacity and commitment to physician leadership

"By proactively embarking on this process, we are taking our future into our own hands and creating a stronger health system for the communities we serve," DeNarvaez said

HMA Stockholders Accept CHS Merger Offer
Stockholders at Naples, FL-based Health Management Associates have voted overwhelmingly to accept the previously announced merger agreement with rival Community Health Systems, Inc., of Franklin, TN. The deal was announced jointly last week by the two for-profit hospital chains.

HMA said its stockholders approved the transaction with approximately 98.7% of the votes cast at a special meeting on Wednesday favoring the agreement, representing approximately 81.7% of HMA's outstanding common shares.

CHS Chairman, President, and CEO Wayne T. Smith, Chairman said he was "pleased that HMA stockholders have seen the significant strategic value in combining with CHS. We are working now to finalize regulatory approvals, and we expect to complete this transaction quickly so that we can integrate our two companies and deliver on our plans for long-term growth and value creation."

The deal is expected to be completed prior to the end of this month and is subject to customary closing conditions, regulatory approvals, and the absence of certain adverse developments.

The deal combines two of the largest publicly traded hospital chains in the nation. CHS owns, leases, or operates 135 hospitals in 29 states with an aggregate of approximately 20,000 licensed beds. HMA through its affiliates operates 71 hospitals in 15 states with approximately 11,000 licensed beds.