Financially strapped St. Francis Hospital’s search for a potential buyer has turned to a Tennessee company, it was announced Thursday morning.St. Francis has a signed a letter of intent to be acquired by LifePoint Health, a Brentwood, Tenn., health-care company.
St. Francis had been in previous discussions with Community Health Services of Franklin, Tenn., and Atlanta-based Piedmont Healthcare, a nonprofit organization like St. Francis.
“LifePoint shares our commitment to quality care and patient safety,” said Richard Y. “Bo” Bradley, chairman of the St. Francis Hospital Board of Trustees. “Their mission, vision and values are in alignment with ours. Partnering with LifePoint will provide our hospital with the financial, operational and clinical support we need to succeed.”
The letter of intent, a non-binding agreement that authorizes St. Francis and LifePoint to move forward, is the first step for the two entities in the process for a potential sale. After due diligence, St. Francis and LifePoint are expected to enter into a definitive agreement and that deal would then be subject to review by the Georgia Attorney General, according to St. Francis.
As part of the proposed partnership, LifePoint has committed to hiring all active St. Francis employees, subject to pre-employment screenings, according to the news release. St. Francis has more than 2,800 employees and 300 physicians.
“We are delighted to sign this letter of intent with St. Francis Hospital and look forward to exploring how we can combine our resources to continue improving health-care delivery in Columbus and surrounding communities,” said LifePoint Chairman and Chief Executive Officer William F. Carpenter III said in a statement. “We recognize St. Francis’ 65-year history as a health-care leader in this community, and we share a commitment to continuing that legacy. We look forward to working with the hospital’s leadership, employees and physicians in the coming weeks.”LifePoint will ensure a local voice in the governance of the hospital, according to the news release.
In January, St. Francis announced it was in exclusive discussions with Piedmont Healthcare. By early March, St. Francis and Piedmont had mutually agreed to open the search process back up. Since early April, St. Francis had been in “exclusive discussions” with Community Health Systems. A St. Francis spokesperson confirmed late Wednesday that those talks had concluded.
St. Francis’ financial troubles surfaced late last year after the former chief administrator had denied the hospital was dealing with financial issues. St. Francis disclosed in November that it was in a nearly $30 million financial hole.
The hospital was coming off a $150 million expansion of its Manchester Expressway campus when management said it could not account for $29.7 million on its books. Calling it an “accounting error,” the company a few weeks later announced it was looking for a “strategic partner” to help put the organization back on stable footing. At that time, it reported having about 2,800 full- and part-time employees and an annual budget of $295.7 million.
The hospital’s largest creditor is the U.S. Department of Housing and Urban Development, which has a hospital financing arm. St. Francis borrowed money from HUD for the expansion and to consolidate other debt. The hospital currently owes HUD about $220 million. St. Francis representatives are in regular communication with HUD, Bradley said in April.
Two of St. Francis’ top executives have left the company since word of the financial crisis became public. President and CEO Robert P. Granger’s resigned in March. Granger had been with the company for 10 years. Former Chief Financial Officer Matt Moore, who had been with the hospital for nine years and had previously worked with Granger at a South Florida hospital, was suspended Oct. 27 and “permanently relieved of his duties” Nov. 14.
Granger and the board of trustees had been operating for at least three years with reports that overestimated the hospital’s revenues and underestimated its expenses, Granger previously said.
Granger said that while he and the board thought the hospital was operating at a point that was break-even or better, it was actually losing money.LifePoint Health is a public company that trades on the NASDAQ exchange. LifePoint owns and operates community hospitals, regional health systems, physician practices, outpatient centers and post-acute facilities in 20 states.