HMA Takes Controlling Stake in 5 Non-Profit Hospitals

Health Management Associates this week finalized a deal that will give the Naples, FL-based hospital chain an 80% controlling stake in five Integris Health Oklahoma hospitals.

Financial terms were not disclosed for the deal, which was finalized April 1.

"We are very pleased to partner with Integris Health and welcome these five hospitals into the Health Management family," HMA president/CEO Gary D. Newsome said in prepared remarks.

The deal is just the latest in a string of acquisitions of not-for-profit hospitals by for-profit hospital companies in all parts of the country. It's a trend that shows no sign of slowing down. The 2012 HealthLeaders Media Healthcare Mergers & Acquisitions Survey found that 78% of healthcare leaders say they will have deals under way or will be exploring deals in the next 12–18 months.  (Download the free, full report here.)

Earlier this year Moody's Investors Service noted the significant challenges that not-for-profit hospitals continue to face, including:

• Pressures on hospital revenues coming from a variety of sources, including Medicare, Medicaid, and commercial payers
• The myriad challenges brought on by healthcare reform, including the transition to a new care delivery model and the uncertainties that come with it, and the increase in physician employment
• The soft economy, which will continue trends in lower utilization, high unemployment, and increase reliance on charity care, self-pay, and government payers.
• Ongoing investment losses caused by volatile bond and equity markets, pension fund obligations, increased capital spending funded with cash reserves, increased exposure to non-cancelable operating leases, and negative valuation of swap portfolios. 

Moody's also noted that mergers and acquisitions generally strengthen health systems' balance sheets, improve management, governance, and efficiencies, and provide an exit for bond holders. 

The Integris Health hospitals are: 53-bed Integris Blackwell Regional Hospital; 64-bed Integris Clinton Regional Hospital; 25-bed Integris Marshall County Medical Center, in Madill; 52-bed Integris Mayes County Medical Center, in Pryor; and 32-bed Integris Seminole Medical Center. The five hospitals total 226 licensed beds and generated about $95 million of net revenue, before the provision for doubtful accounts over the past year.

HMA subsidiaries operate 71 hospitals with about 10,600 licensed beds in non-urban communities in 15 states. Not-for-Profit Integris Health Oklahoma is the state's largest health system.  Approximately six out of every 10 Oklahomans reside within 30 miles of an Integris Health facility.