Hospital facilities could fetch $62.5 million

By Vicki Hyatt | Nov 01, 2013

Out of the 26 companies invited to consider buying or leasing Haywood Regional Medical Center, only two submitted offers.

Duke LifePoint is offering $26.5 million to purchase the hospital business and facilities, with a promise to invest an additional $36 million to be funded over an eight-year period.

The other bidder was Pinnacle Healthcare Development, a physician-led group based in Kansas that offered $57 million in cash and capital commitments.

On Friday, the public had a chance to see who the bidders were and review specifics of the two proposals the HRMC governing board has been considering for weeks. A public hearing will be held to gather input on the offers prior to a scheduled vote on Nov. 12.

Both Pinnacle and Duke LifePoint also made offers to WestCare, which operates hospitals in Jackson and Swain counties, and is part of the MedWest system formed with Haywood in 2010. Since WestCare is a private, nonprofit organization, those proposals won’t be disclosed.

Last Tuesday, the WestCare board voted to accept the Duke LifePoint offer.

Pinnacle President and Board Chairman Dr. William Reed said Friday he was disappointed that the tide is turning toward another offer, but said he’s seen negotiations break down before, and will still be interested if that should happen.

Reed has spent time in North Carolina and trained at Duke University.

“We had wonderful encounters at WestCare and Haywood,” he said. “We thought we were well on the path to being lead dog. We had no knowledge LifePoint was involved.”

The inability of MedWest to survive is an “opportunity lost,” Reed said, noting he thought there would have been a wonderful synergy had Pinnacle been able to acquire both Haywood and WestCare.

“The value is not there in Haywood alone as there would have been with all three,” he said, “but we would still be interested.”

After the MedWest experience with Carolinas HealthCare, which was given a management contract to operate the system, Reed said he can understand why LifePoint has the inside track.

“They tried an entity that was small and it didn’t work out, so they’re trying to go much bigger,” Reed said. “They will be a cog in a wheel with at least 60 cogs as opposed to aligning with Pinnacle, where they would have received very personal attention. …We thought we would be ideal being physician-led.”

Reed said his plan was for Haywood to provide many of the services WestCare patients now are receiving at Mission Hospital in Asheville.

“It is distressing to see so much of the WestCare business that could have been going to Haywood going on to Mission. We planned to put a stop to that as quickly as we could,” he said. “Haywood is closer and an equal destination for those specialty services.”

Reed said he observed the specialty offices Mission has opened on Haywood’s perimeter, and said he felt confident he could convince the physicians to change alignment.

“Their intentions are clear. They (Mission) didn’t want to buy Haywood. They wanted to run them over,” Reed said.

After the WestCare vote selected Duke LifePoint as a buyer, Mission Hospital released a statement expressing disappointment that a for-profit Tennessee-based company interested in serving Wall Street and shareholders was chosen.

Mission had presented a proposal to buy WestCare, but not Haywood.

Ann Young, general counsel, released the following statement.

“Our analysis identified what we believed to be insurmountable regulatory concerns that would prevent Mission from partnering with Haywood,” she wrote. “As the result, Mission made a proposal only to partner with WestCare.”

Our of respect for the public process that lies ahead, officials at Duke LifePoint are declining to comment at this point.

Mark Clasby, MedWest board chairman, said there is still much to be done before any deal is struck.

“You need to get a memorandum of understanding established before we can start due diligence,” Clasby said. “The first phase was Stroudwater (the consulting firm that helped pave the way for the sale). Next is approval by the two legacy boards, and then we’re in to the MOU and due diligence before we eventually get to closing."

The HRMC governing board intends to go into a closed session immediately following the public hearing and is expected to announce a decision at the end of the meeting.

 

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