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Columbia sheds more fat
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May 19, 1998: 9:50 a.m. ET
Embattled hospital operator is selling 22 facilities to consortium for $1.2B
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NEW YORK (CNNfn) - In a $1.2 billion deal, Columbia/HCA HealthCare Corp. said Tuesday it has agreed to sell 22 hospitals and related facilities to a consortium of nonprofit health care organizations and public authorities.
The sale of the hospitals, all units of Columbia's Atlantic Group, is part of a previously announced divestiture. The move comes at a time when Columbia, the largest hospital operator in the U.S. with about 500 hospitals and surgery centers nationwide, is in turmoil, facing wide-ranging federal probes into its Medicare and patient-referral procedures.
The divestiture, begun last November, already has seen the spin-off of the company's prescription benefit management unit.
Last month, Columbia announced plans to sell 34 outpatient centers to rival HealthSouth Corp. for $550 million. That move, coupled with Tuesday's sale and other planned cuts, is expected to trim Columbia's once-expansive network of hospitals by a third.
Columbia said Tuesday that it had entered into separate purchase agreements with each member of the consortium, which don't share liabilities with any other member of the group.
The deal is expected to close in the third quarter.
The consortium is comprised of five facilities in North Carolina, four in Kentucky, seven in Alabama and six in Tennessee.
They are Alliant Health System; Baptist Health; Duke University Health System; Eliza Coffee Memorial Hospital; Johnson City Medical Center Hospital; New Hanover Regional Medical Center; Novant Health; and Pitt County Memorial Hospital.
Columbia said the transaction isn't contingent on financing conditions. Goldman Sachs & Co. is acting as Columbia's financial adviser in the deal.
Columbia's latest divestiture comes about eight months after federal investigators launched a wide-spread probe into alleged fraud in the company's Medicare billing practices.
More recently, regulators have begun scrutinizing Columbia for purported violations of federal securities laws. Columbia has acknowledged the probes in official filings, but has declined to comment further.
Three Columbia managers have been charged with defrauding federal health insurance programs.
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Columbia/HCA
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