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Healthy agreement: LRMC’s CEO sees merger with CHS as a good deal

August 7, 2013
By MEL TOADVINE (mtoadvine@breezenwewspapers.com) , Lehigh Acres Citizen

Joanie Jeannette, Lehigh Regional Medical Center's CEO, painted a positive picture concerning the proposed merger of the owners of LRMC and several other hospitals in the southeastern part of the U.S. with Community Health Systems (CHS).

The announcement of the intended purchase of Health Management Associates, owners of LRMC and other hospitals, was made last week when CHS said it planned to acquire the Naples-based management group in a $3.9 billion deal that will create a very large hospital-for-profit chain just as the nation's Affordable Health Care Act or Obamacare as many call it, prepares to put millions of people into the nation's health system because millions will be required to purchase insurance and be able to pay for hospital and other medical expenses.

With the announcement last week, Jeannette, who has been CEO of the Lehigh Regional Medical Center for 2 1/12 years, said that she understood that a lot of attention has been paid to the planned combination of Health Management Associates, Lehigh Regional's parent company, and Community Health Systems (CHS).

Article Photos

Joanie Jeanette

"There are some important points about this combination that I wanted to share with the Lehigh Acres community," Jeannette told The Lehigh Acres Citizen.

"First CHS desires to buy our parent company because it believes Health Management's 71 facilities across the country, including LRMC, are excellent hospitals.

"Secondly, it is not expected that the operations of Lehigh Regional Medical Center will be affected in any way for the foreseeable future. If anything, should the combination of our parent company with CHS occur, it will be very beneficial to all the hospitals involved - including Lehigh Regional and Lehigh Acres.

"Together, I believe we will be part of an even stronger company which certainly benefits our community, our physicians, our associates, and most importantly our patients. We look forward to the combination and the opportunities it will present for all involved," Jeannette said.

Tennessee-based Community Health Systems has agreed to acquire HMA in a $7.6 billion deal, about $3.7 billion of is debt. The deal elevates Community Health system's portfolio to 206 hospitals now in 29 states.

A Naples financial expert told the media he was not surprised to hear about the purchase of Health Managements Associates. Andrew Hill, president and co-founder of Naples-based Andrew Hill Investment Advisor Inc., said he follows Naples-based HMA closely and the potential sale had been rumored for months.

He told The Naples Daily News that he expects the sale to happen, trumping efforts by one of HMA's largest shareholders to replace the hospital operator's entire board of directors.

"They're gone, they're toast, Hill said of HMA. "Basically, with the acquisition of the company, then there is no need to change the board because they are history," he said.

He said that HMA has gone through many CEOs and there has been one after the other and nobody could quite get it right and that's not surprising and that just kind of happens after the patriarch leaves," he said.

He was referring to William Schoen who was HMA's former CEO.

The sale is bad for Naples, he said, because it could take away all, or most of the executives making all the money and spending that money in the community. He said HMA has never disclosed how many people are employed at its headquarters office.

After the announcement was made to HMA hospital CEOs, such as Jeannette, she said 380 employees and 75 physicians on staff were informed by her personally or via email shortly after the word was made public, said Diann Cimring, LRMC's marketing director.

She said that of the 75 doctors on staff, a dozen are employed physicians in the Lehigh Medical Group.

HMA purchased the Lehigh hospital in 2001 and has made vast improvements to the medical practices of the hospital, often being cited by national organizations for its good to excellent service.

HMA, again, owners of LRMC in Lehigh, operates the two Physicians Regional hospitals in Collier County where HMA headquarters have been located.

HMA Chairman William Schoen said last week he believes they have found the right partner and that the transaction with CHA will benefit the great community that he said they serve.

He said he and CEO Wayne Smith, of Community Healthy Systems started discussions regarding a possible deal in late 2012. Smith said HMA brings a "very attractive portfolio and indicated that Florida will be one of the merged company's largest markets."

CHA under the merger purchase would own or operate 206 hospitals in 29 states with a total bed count of more than 31,000. HMA owns 71 hospitals.

The transaction is expected to conclude in March of 2014 when shareholders are expected to vote for its approval.

Both the CHS board of directors and HMA's board unanimously approved the agreement and recommended that its stockholders okay the merger.

Finally, under agreement terms, CHS will acquire all of the issued and outstanding common stock of HMA for a combination of cash and CHS stock currently valued at $13.78 per HMA share, based on CHS's closing stock price at the end of July and consisting of $10.50 per share in cash plus 0.06942 of a share of CHS common stock for each HMA share.

HMA shareholders, according to news reports, will own about 16 percent of the shares of the combined company following the closing of the transaction.

The final sale is subject to an approval by a 70 percent vote of HMA's stockholders, antitrust clearance, receipt of other regulatory approvals, the absence of certain adverse developments, and customary closing conditions. The transaction is not subject to a financing condition as CHS has received financing commitments from Merrill Lynch, Credit Suisse and their affiliates, according to news sources.

 
 

 

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