National hospital merger to be felt in Georgia

Print Friendly and PDF By: Andy Miller Published: Jul 30, 2013

The proposed $3.9 billion acquisition of Health Management Associates by Community Health Systems would unite five Georgia hospitals as part of a huge new  chain.

The deal reflects the hospital consolidation accelerating across the nation, ignited in part by the health reform law of 2010.

With the closing of the deal, expected by next spring, Tennessee-based Community Health Systems would own or operate 206 hospitals in 29 states.

That would make it the nation’s largest for-profit hospital company by number of facilities, though current industry leader HCA would remain the largest in terms of revenue, the Nashville Tennessean reported.

Community Health Systems operates two hospitals in Georgia: Fannin Regional Hospital in Blue Ridge and Trinity Hospital of Augusta.

HMA, based in Naples, Fla., has three hospitals in the Peach State: Barrow Regional Medical Center in Winder; Clearview Regional Medical Center in Monroe; and East Georgia Regional Medical Center in Statesboro.

Of the total deal, $3.9 billion will come in the form of cash and stock, and CHS has agreed to take on a total of $3.7 billion in debt from HMA.

Some analysts had not expected Community Health to go forward with a deal considering its recent poor earnings performance in the second quarter, the Tennessean article reported.

“I would have expected the management team to really focus on getting their house back in order and now they’re taking on another company that’s got real operating problems and both companies have very substantial legal problems,” Jeff Villwock, managing director with Atlanta investment banking firm Genesis Capital LLC, told the Tennessean.

HMA had been under pressure on a number of fronts in recent months, including an ongoing federal investigation over its admission practices.

In addition, one of HMA’s largest shareholders, Glenview Capital Management, had been pressing to replace the company’s board of directors.

“This compelling transaction provides a strategic opportunity to form a larger company with a diverse portfolio of hospitals that is well positioned to realize the benefits of health care reform and to address the changing dynamics of our industry,” Community Health CEO Wayne Smith said in a statement.

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