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St. Francis, amid financial trouble, enters talks with Tennessee's Community Health Systems

St. Francis Hospital said Thursday it has begun “exclusive discussions” with a subsidiary of Franklin, Tenn-based Community Health Systems, with an agreement of some sort between the two expected in the “near future.”

The development, announced late Thursday afternoon by Richard Bradley, chairman of the St. Francis Board of Trustees, could lead to a full or partial acquisition by Community Health Systems or an operating agreement. The Tennessee health-care system is a publicly traded company on the New York Stock Exchange.

“We see many similarities between the values and services of Community Health Systems affiliated hospitals and those we hold here at St. Francis,” Bradley said in a statement. “The board is committed to a smooth process and optimistic that there will be a definitive agreement in the near future.”

The latest news comes only two days after St. Francis, the city’s heart surgery hospital, named Kirk Wilson its interim president and chief executive officer, replacing former CEO Robert Granger, who resigned a month ago with St. Francis facing severe financial trouble. Granger had been with the hospital for a decade. Wilson previously was president and CEO of St. Joseph’s Health Systems in Atlanta.

St. Francis on Thursday said it is now in the “due diligence process” with Community Health Systems, a legal term for detailed negotiations as the two sides work toward a final agreement.

The Columbus hospital said the “proposed transaction” would bring it an “infusion of capital investment” while allowing it to keep current medical staff and continue to recruit new doctors to the community. It went further, saying the potential deal would include the “hiring of substantially all active employees” who are in good standing, with those personnel able to keep their same positions and years of service already accrued.

Any agreement, St. Francis said, also would make sure the board of trustees remains “local,” with it comprised of the hospital’s medical staff and community leaders.

Founded in 1985, Community Health Systems is headquartered in Franklin, Tenn., a southern suburb of Nashville. Music City is also the home of Hospital Corporation of America, the largest hospital and free-standing surgery center company in the world.

Community Health Systems is a major operator of general acute-care hospitals. The firm’s website says it currently owns, leases or operates 200 hospitals in 29 states, amounting to 30,400 beds. It currently is affiliated with five hospitals in Georgia — Trinity Hospital in Augusta, Barrow Regional Medical Center in Winder, Clearview Regional Medical Center in Monroe, Fannin Regional Hospital in Blue Ridge and East Georgia Regional Medical Center in Statesboro. It is affiliated with 10 hospitals in Alabama and 26 hospitals or health systems in Florida.

The Tennessee firm reported net income of $100 million on operating net revenue of $18.6 billion in 2014. In trading Thursday on the New York Stock Exchange, shares slipped 20 cents to $52.91 apiece.

It was last November that St. Francis Hospital — coming off a $150 million expansion of its Manchester Expressway campus — said that its management could not account for nearly $30 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.

In January, the Columbus hospital announced it was in discussions with Atlanta-based Piedmont Healthcare, saying it was seeking “potential partners to sustain this valuable community asset.”

In early March, the St. Francis board said it was no longer talking exclusively with Piedmont — in essence, looking for other offers and partners — and that Granger was resigning as president and CEO after a 10-year stint.

The culmination of Granger's time at the helm was the largest expansion in the nearly 65-year history of the hospital. The $150 million project included expanding overall space from 600,000 square feet to nearly 1 million square feet, with two large buildings constructed for clinical services and medical offices — while creating a new Women’s Hospital and Heart Hospital. It also added baby delivery services for the first time in decades.

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