Wednesday, May 20, 1998

Columbia/HCA selling 22 hospitals

NASHVILLE, Tenn. (AP) -- Columbia/HCA Healthcare Corp. on Tuesday announced plans to sell 22 hospitals to a nonprofit consortium for $1.2 billion as part of efforts to get smaller and concentrate on improving patient care.

The hospitals are located in Tennessee, North Carolina, Kentucky and Alabama.

"This move is the right thing to do for these communities," said Dr. Thomas Frist, Columbia's chairman and chief executive. "It's also another positive step forward in completion of the company's strategic reorganization."

David Cyganowski and Fred Hessler, of the Health Care Finance Group at Salomon Smith Barney, called the transaction "the largest purchase ever by not-for-profit health care organizations of hospitals and facilities." Salomon Smith Barney helped broker the deal.

Columbia's sale involves 22 hospitals, one ambulatory surgery center and office buildings for all 23 facilities. All are part of Columbia's 45-hospital Atlantic Group.

The company previously said it planned to sell some of those hospitals and either spin off or reposition the others within the company. Columbia spokesman Jeff Prescott said the company will "move fairly expeditiously" on the repositioning or sale of remaining Atlantic Group hospitals.

The buyers are: Alliant Health Care System of Louisville, Ky.; Baptist Health of Montgomery, Ala.; Duke University Health System of Durham, N.C.; New Hanover Regional Medical Center of Wilmington, N.C.; Novant Health of Winston-Salem, N.C.; and Pitt County Memorial Hospital of Greenville, N.C.; Eliza Coffee Memorial Hospital of Florence, Ala.; and Johnson City Medical Center Hospital of Johnson City, Tenn.

It is unclear whether any of the hospitals will be closed or merged, but consolidation of operations and job cuts seemed likely for at least some.

Columbia, which still would own 314 hospitals after the sale, is the target of a U.S. Justice Department investigation looking into whether the company overcharged Medicare, Medicaid and other government health care programs.

Three middle managers were indicted in Florida and face trial in October. They have pleaded innocent.

The investigation, which started more than a year ago, prompted Columbia's stock to plummet and caused a management shakeup that saw Frist replace the combative Richard Scott last summer.

Scott was defiant toward federal investigators and plowed ahead with plans to continue growing the company.

When Frist replaced Scott, he promised to cooperate with with

When Frist replaced Scott, he promised to cooperate withinvestigators. He also vowed to pay more attention to patient care.

Last fall, he announced a major restructuring that included the proposed sale or spin off of about one-third of the company's hospitals.

Under Scott, Columbia grew to a company with $20 billion in annual revenues and 285,000 employees. Frist has said he wants to shrink Columbia by about one-quarter.

At last week's annual shareholders meeting, Frist said he expected Columbia's reorganization and the investigation would be completed by the end of March.

The sale is subject to regulatory approval and is expected to be completed by the end of September.