Baptist to Buy Ark. Hospital — Expanded Territory Will Help Sustain Specialized Programs
By Daniel Connolly
Baptist Memorial Health Care is in negotiations to buy a majority stake in 104-bed Northeast Arkansas Medical Center in Jonesboro.
The purchase would give Baptist a stronger foothold in Arkansas, where the Memphis-based group had previously owned several hospitals.
Baptist would buy the 60-percent stake that Nashville-based corporation Community Health Systems Inc. holds in the hospital. Northeast Arkansas Clinic, a physicians’ group, would keep control of the other 40 percent.
Baptist has signed a nonbinding letter of intent and hopes to close the deal in the next few months, said David Hogan, Baptist’s executive vice president and chief operating officer. He declined to describe a price range for the hospital in the fast-growing town 70 miles northwest of Memphis.
“We have a lot of people who come from Arkansas to Memphis for treatment,” he said. “Hopefully by being in Jonesboro, we’ll be able to treat those patients there rather than them going to Memphis.”
Baptist, a nonprofit that operates 14 hospitals and other medical services in Memphis and west Tennessee and North Mississippi, pulled up stakes in Arkansas when it sold its hospitals in Blytheville, Forrest City and Osceola, to private entities in late 2004 and early 2006. It has retained professional relationships with several medical organizations and physicians in the state.
Baptist’s 706-bed flagship hospital in East Memphis offers a range of specialized services. Big hospitals like this need to draw from a wide geographic base to find enough patients to finance these special programs and keep staff members’ skills sharp, said Cristie Upshaw Travis, CEO of the Memphis Business Group on Health, an organization representing employers’ health care interests.
“If you can’t get that volume right in your own city, you may need to start pulling people in,” she said. Having an Arkansas hospital could help strengthen a “feeder system” for patients whose problems couldn’t be solved in Jonesboro, she said.
Community Health Systems recently spent billions of dollars to buy the Jonesboro hospital’s previous majority stakeholder, Triad Healthcare, which operated hospitals throughout the United States.
Partnering with Baptist means the Jonesboro hospital is less likely to see more changes in ownership, said spokeswoman Holly Acebo.
That point was echoed by Jim Boswell, CEO of Northeast Arkansas Clinic.
“We believe that Baptist brings a lot to this community and brings stability and a commitment to high-quality patient care,” he said. “Not that Community Health Systems doesn’t. But Baptist is more regional.”
Rosemary Plorin, spokeswoman for Community Health Systems, declined to comment.
If the deal goes through, Baptist will be buying a hospital in good financial condition. The hospital has annual revenue of roughly $120 million and about nine in 10 patients have commercial insurance or Medicare, the federal health insurance program for the elderly, Boswell said. The rest fall into different categories.
Hospitals earn money when they treat patients with commercial insurance and can break even or sometimes make a profit with Medicare patients.
By contrast, some Memphis hospitals have high percentages of patients with little or no insurance. Their treatment costs hospitals money.
– Daniel Connolly: 529-5296
Originally published by Daniel Connolly daniel.connolly@commercialappeal.com .
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