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Barberton facility sells in '07 for $21.2 million less than it did in 1996
By Cheryl Powell
Beacon Journal medical writer
Published on Tuesday, Apr 01, 2008
Summa Health System purchased Barberton Hospital late last year for $21.2 million less than the community hospital's sale price a dozen years ago.
Summa paid Community Health Systems Inc. of Tennessee $53.8 million last year for the 311-bed community hospital, according to a recent filing with the Securities and Exchange Commission.
When Barberton voters agreed to sell the city-owned hospital in 1996, former for-profit hospital chain Quorum Health Group Inc. paid $75 million for the facility. The proceeds created the Barberton Community Foundation.
Quorum then was purchased by Triad Hospitals Inc., which subsequently was acquired in July by Community Health Systems, another for-profit.
Barberton Hospital was among 12 hospitals CHS sold last year after acquiring Triad, said Sandy Steever, editor of Health Care M&A Monthly, an industry newsletter that tracks mergers and acquisitions.
CHS remains the majority owner of Affinity Medical Center, which was created by the merger of Doctors and Massillon Community hospitals in Stark County. (Akron General Medical Center has a minority ownership stake in Affinity.)
In recent years, Steever said, hospital purchase prices have been down slightly.
''Part of that is going to be depreciation, just the value of the real estate,'' he said. ''It's an older hospital, which means more maintenance cost. And it might not have had an IT system that you'd want to have today.''
The price tag for hospitals also tends to be higher when nonprofit facilities are acquired by for-profit operators, Steever said.
Summa paid about $237,000 per staffed bed — roughly the national median price per staffed bed among hospitals sold last year, Steever said.
Using another ratio that compares the sale price to hospital revenues, however, Barberton's price tag was lower than the national average, he said.
''I can see Ohio being a somewhat difficult environment,'' Steever said. ''There are aging hospitals . . . and a fair amount of competition.''
Summa spokesman Mike
Bernstein said the health system paid a fair price for Barberton Hospital.
The sale price included the assumption of bills the hospital has to pay to do business, Bernstein said.
The purchase was financed with interim bank financing, which will be replaced by tax-exempt long-term bonds after Summa receives a letter from the Internal Revenue Service indicating that Barberton Hospital has tax-exempt status.
Since 1997, Summa had a small stake in Barberton Health System LLC, the hospital's parent company.
''We've had a long-standing relationship with Barberton Hospital,'' Bernstein said. ''When the opportunity came to work with them, it was a logical fit.''
Summa is continuing to work with the hospital to fully integrate the facility and its 1,017 employees into the health system, Bernstein said.
So far, at least, the biggest change has been dropping ''Citizens'' from the Barberton Citizens Hospital moniker.
Summa hasn't named a replacement for longtime Barberton Hospital President and Chief Executive Willard P. Roderick, who previously announced he plans to retire May 31.
Cheryl Powell can be reached at 330-996-3902 or chpowell@thebeaconjournal.com.
Summa Health System purchased Barberton Hospital late last year for $21.2 million less than the community hospital's sale price a dozen years ago.
Get the full article here.
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