22 Investor-Owned Hospital Companies to Know
Ardent Health Services. Based in Nashville, Tenn., Ardent owns and operates 11 acute care hospitals, two multi-specialty physician groups, a 220,000- member health plan and one national medical laboratory. A partner of some the most respected names in healthcare, such as Ochsner in New Orleans and Lovelace in Albuquerque, Ardent reports $1.7 billion in revenues for 2006. The company’s medical/surgical hospitals and health systems employ 10,000 people in growing urban and suburban areas. Ardent says it focuses on consistent reinvestment, with a systemwide focus on quality and access to shared administrative and clinical resources.
Capella Healthcare. Capella Healthcare was founded in 2005 by hospital executives with more than 100 combined years of management experience in over 200 hospitals nationwide. Capella-affiliated hospitals are non-urban, general acute care hospitals operated in partnership with communities that are growing or have service needs that are not currently being met. Early in 2008, Capella finalized the acquisition of nine general acute care hospitals representing approximately $425 million in net revenue from Community Health Systems. Capella is backed by GTCR Golder Rauner, one of the nation’s leading private equity firms; it committed an initial $200 million in equity to Capella in 2005. Capella says it is able to leverage that capital at a multiple of four-to-six times and therefore has total capital resources of approximately $1 billion dollars.
Cirrus Health. Founded in 1996, Cirrus Health owns and operates seven surgical and community hospitals in the southwest United States. Led by Tim Parris, CEO, and John Thomas, president and chief development officer, Dallas-based Cirrus identifies markets that are underserved or show signs of growth, studies market referral patterns and creates surgical partnerships with physicians to fit communities’ surgical needs by delivering state-of-the-art facilities and technology. The portfolio of Cirrus companies, which includes Cirrus Health and The Cirrus Group, a medical services real estate development company, includes more than 30 projects in 11 states.
Community Health Systems (CHS). One of the largest investor-owned hospital companies, CHS operates general acute care hospitals in non-urban communities, with 118 hospitals in 29 states as of Oct. 1, 2008. Wayne Smith, CEO and president. who has been among Modern Healthcare’s top 50 most powerful people in healthcare four years running, led the acquisition of Triad Hospitals in 2007, and has led CHS from $742 million in net revenue to over $4 billion in 2006 — an industry-strongest compound annual growth rate of 24 percent. CHSaffiliated hospitals employ more than 90,000 people and recruit hundreds of physicians to hometown hospitals annually.
Essent Healthcare. Eight-year-old Essent Healthcare named Mike Browder, its longtime CFO, to the role of CEO this past summer to carry out the company’s “commitment to deliberate, sustainable growth” through regular acquisitions. Essent, based in Nashville, Tenn., acquires and manages full-service institutions that are essential to their growing communities. The company’s facilities — which include award-winning Sharon Hospital in Connecticut — had an estimated $37.6 million in revenue in 2007.
Foundation Surgery Affiliates. Foundation Surgery Affiliates was founded in 1996 by Thomas Michaud. Based in Oklahoma City, Ok., FSA owns and operates 25 surgical hospitals and surgery centers in Texas, Oklahoma, New Jersey, Pennsylvania, Ohio and Indiana. It works with physicians from each project’s inception, and is involved in every phase, including group formation, construction, development and facility operation. FSA, which offers specialized services in developing bariatrics in surgical facilities, reportedly had $20 million in revenues in 2007, and was named one of Oklahoma’s 25 best places to work by OKCBusiness.
Hospital Corporation of America (HCA). Nashville-based HCA was one of the nation’s first hospital companies when it was founded in 1968. It is now the nation’s leading provider of healthcare services, composed of 166 hospitals and 114 outpatient centers in 20 states and England. The locally managed facilities of HCA and its affiliates employ approximately 180,000 people. Now-retired chairman and CEO Jack Bovender Jr. and Richard M. Bracken, president and COO, led HCA to generate $26.9 billion in revenues and assets of more than $24 billion in 2007. With Mr. Bovender’s retirement at the end of 2008, Mr. Bracken also assumed the role of CEO.
IASIS. Founded in 1998, privately-held IASIS Healthcare is a leading owner and operator of community- focused hospitals in high-growth markets. It is focused on building strong relationships with physicians, employees and payors founded on a common vision of quality care, customer service, appropriate mix of services, cost control, and capital investments designed to meet the healthcare needs of the communities the company serves. IASIS, based in Franklin, Tenn., current owns and operates 15 general, acutecare hospitals and one behavioral hospital spanning six states. IASIS Healthcare began principal operations in Oct. 1999, in transactions arranged by the management team of Joseph Littlejohn & Levy. In 2004, Texas Pacific Group, a private equity firm managing over $13 billion in assets, led a group of investors to acquire IASIS. Today, TPG is the single largest stockholder in IASIS.
LHP Hospital Partners. Established in Jan. 2008 by CEO Daniel Moen, LHP boasts an experienced management team that will own, operate and manage acute care hospitals in small cities and in select urban markets throughout the United States. LHP’s core competency includes acquiring, operating, developing and managing acute care hospitals, and its unique development strategy focuses on acquiring and developing hospitals in partnership with various not-forprofit hospital companies. Plano, Texas-based LHP is sponsored by an affiliate of private equity firm CCMP Capital Advisors and Canada Pension Plan Investment Board.
LifePoint Hospitals. Established in 1999 as a spinoff of HCA, LifePoint’s sole mission is to develop strong, community-based hospitals in non-urban markets. In almost every case, each of the 49 LifePoint hospitals located in 18 states serves as the only acutecare facility in a community. Brentwood, Tenn.-based LifePoint employs approximately 21,000 in nonurban markets, which the company believes offers potential for significant operational improvement. LifePoint focuses on providing management, enhanced medical services, dedicated physician recruitment, state-of-the-art technology and capital resources to its community hospitals. LifePoint reported $2.63 billion in revenues for 2007, a gain of nearly 10 percent over 2006.
Medical Facilities Corp. (MFC). MFC owns 51 percent or greater interest in four specialty surgical hospitals in South Dakota and Oklahoma. The specialty hospitals perform scheduled surgical, imaging and diagnostic procedures and, combined, have a total of 30 ORs and 51 recovery beds. In its 2008 third-quarter financial results report, the company announced that facility service revenue had increased 24.9 percent to $48.4 million, up from $38.7 million in the third quarter of 2007, and that operating income was up 26.4 percent, from $15.2 million in 2007 to $19.2 million in the third quarter of 2008. While MFC is a British Columbia corporation, it is designed to be similar to Canadian Income Trusts.
National Surgical Hospitals (NSH). Founded in 1998 and based in Chicago, NSH partners with local physicians to develop freestanding surgical hospitals. NSH says it is one of the most highly capitalized specialty hospital companies, with access to the growth capital necessary to remain competitive by adding services and investing in the latest technology for its 11 surgical hospitals. Under the guidance of John Rex-Waller, NSH’s chairman, president and CEO, NSH has continued to grow, opening or acquiring interests in four facilities in 2008. NSH had revenues of $250 million in 2007 and employs over 1,500 people at its facilities.
Prexus Health. Led by Ajay K. Mangal, MD, MBA, Prexus Health specializes in developing and managing surgical hospitals as well as other healthcare facilities. Cincinnati-based Prexus counts five medical centers among its portfolio, all of which are 100 percent physician-owned (and which employ openmodel ownership); the company itself is owned and controlled by physicians with more than 40 years’ combined public and private company experience. The company’s facilities are focused on specialized outpatient and inpatient services across multiple specialties, and on providing community-based care. Prexus was named No. 137 on Entrepreneur magazine’s “Hot 500” companies list for 2008 and reported 2006 revenues or $39 million.
Regent Surgical Health. Regent Surgical Health is an experienced physician-owned hospital developer and manager. Co-founders Tom Mallon, CEO, and Mike Karnes, CFO, lead a team that specializes in acquiring and turning around underperforming physician-owned hospitals. In 2008, Westchester, Ill.-based Regent launched a program with board-certified neurological surgeon James Lynch, MD, to help physicians develop neurosurgery centers and specialty spine hospitals. Regent’s principals invest their capital and expertise in each facility, sharing risks side-by-side with its surgeon and hospital partners.
Resurgence Health Group. Resurgence Health Group was founded to acquire smaller, sole or dominate provider non-urban hospitals in key areas throughout the Southeast. The company acquires and then converts provider community hospital into an integrated acute care medical facility, adding nonacute care services and physicians where needed to increase utilization and profitability. Over the past 20 years, the company has recruited more than 750 physicians with a 95 percent retention rate. Resurgence reported $4.6 million in revenues in 2007.
RMC Medstone Capital. RMC MedStone Capital was founded in 2007 when parent company RM Crowe, a Dallas-based real estate developer and property manager led by R. Maurice Crowe Jr., who is CEO of both companies, bought out TruMedical Partners and renamed the company RMC MedStone Capital. RMC MedStone, which is headed up by Mike Lipomi, president, currently owns and operates five facilities, with several others in various stages of development. Doug Johnson, president of the board of Physician Hospitals of America, is a new addition to the management team as COO. RMC Medstone recently announced plans to use a $50 million fund to acquire healthcare opportunities worth $150 million over the next six to nine months.
Signature Hospital Corp. Houston-based Signature focuses on revitalizing the market position and operating performance of community hospitals. The company’s collective experience includes serving as CEO of five public companies, co-founding more than a dozen successful healthcare corporations and directing the management of more than 400 hospitals ranging in size from small rural hospitals to major academic medical centers. In total, they have helped recruit hundreds of physicians to hospitals across the country and have raised more than $5 billion in capital. It currently operates hospitals in Texas and West Virginia. The company is backed financially by Goldman Sachs.
SunLink Health Systems. SunLink is a nonurban community healthcare provider for seven hospitals and related businesses in four states in the Southeast and Midwest. Each SunLink hospital is the sole acute general healthcare provider in its community. The company, based in Atlanta, strategically acquires, manages and grows its facilities to improve healthcare in the communities it serves. The company, formed in 2000, reports more than $143 million in net patient service revenue for 2007, $8 million more than in 2006. SunLink’s mission is to provide facilities, services, products and dedicated physicians and health professionals to deliver quality, efficient medical care to residents of rural communities.
Tenet Healthcare Corp. With 56 acute care hospitals in 12 states employing 62,000 workers and $8.7 billion in net operating revenues, Dallasbased Tenet is one of the largest hospital players. The company says it aims to achieve dual goals of competitive returns for investors and holding integrity and honesty as its most important principles. As a result, the company’s facilities saw over half a million admissions and 4 million outpatient visits in 2007, while the Tenet Healthcare Foundation gave more than $5.1 million in charitable contributions in 2007. Tenet is led by Trevor Fetter, president and CEO.
Transition Healthcare Co. (THC). THC is a newly formed company with offices in Chicago and Nashville. Led by founding members Tom Reardon, Arnold Kimmel, Barbara Groux, Enrique Beckman, MD, PhD, and John Ulett, and financially backed by Falcon Investors, the management team presents expertise in hospital turnaround and management, financial resources and financial market savvy. THC and Falcon jointly own MSMC Investors, which, in July 2008, acquired St. Francis Hospital & Health Center in Blue Island, Ill., SSM Hospice at St. Francis and SSM Home Care at St. Francis from SSM Health Care Corp., and renamed the hospital MetroSouth Medical Center. The company invested more than $30 million for initial the purchase and turnaround effort. After years of losing millions, MSMC was close to breakeven in the first month of operation, a slight gain was achieved in September and profitability was expected to be restored by the end of calendar year 2008.
Universal Health Services (UHS). UHS, one of the nation’s largest investor-owned healthcare management companies, owns and operates, through its subsidiaries, acute care hospitals, behavioral health centers, surgical hospitals, surgery centers and radiation oncology centers nationwide and in Puerto Rico. Founded in 1978 by Alan B. Miller, president, CEO and chairman of the board, the company’s facilities now employ more than 38,000 people. UHS, based in King of Prussia, Pa., is one of only a few investment-grade-rated publicly traded healthcare companies. UHS notes that, in addition to ready access to the public capital markets, it is supported by a very strong bank group, including many of the country’s largest banks as well as several strong regional banks.
Vanguard Health Systems. Vanguard Health Systems owns and operates 15 hospitals and complementary healthcare services in four states, developing locally-branded, comprehensive healthcare delivery networks in urban markets, and targeting acquisitions where there are opportunities to partner with leading delivery systems in new urban markets. The Nashville-company reports that, for the year ended June 30, its total revenues were nearly $2.8 billion, an increase of $210 million or 8.1 percent from the prior year period. Vanguard attributes its success to “working with each partner system one-on-one.”
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