Wednesday, November 23, 2005

In-fighting in the Medical Community

Red River Valley Radiology Associates, one of the hospital's most consistant tenants, is being evicted, according to one of the radiologists.

They've not just said that they were not going to renew their lease, they are attempting to vacate it and the building of its tenants.

Possibly it's the pressure of competition, since RRVR has managed to keep fully qualified staff, while the hospital's radiology program has suffered an almost complete turnover since the purchase by Essent. Currently the hospital is desperately searching for a registered vascular sonographer, since their one and only has quit. Regulations require the hospital to have one on staff in order to bill for vascular exams, a large source of revenue for any hospital.

Since Essent has taken over, the hospital has lost their two main CT technicians, two nuclear medicine techs, two sono techs, and various other experienced x-ray personnel. They have replaced them with students fresh from classes, some not even registered to perform the exams that they attempt.

Red River, on the other hand, has maintained a consistancy that chacterizes a family business.

The hospital has recently established a policy of salary compression--essentially saying that a nurse with 20 years of experience has no more worth than that with 15...which caused another exodus of experienced nursing staff...driving some of the physicians to screaming fits during rounds. (Not quite screaming, medical professionals would never do that....)

Essent Drops One....

SSM Health Care Finalizes Purchase of Crossroads Regional Medical Center, Renames Facility SSM St. Joseph Health Center-Wentzville

SSM Health Care-St. Louis announced today that it has finalized the purchase of Crossroads Regional Medical Center (CRMC) in Wentzville and renamed the facility SSM St. Joseph Health Center-Wentzville.

Beginning today, SSM St. Joseph Health Center-Wentzville will offer patients in Wentzville and surrounding communities a 24-hour emergency department, as well as convenient access to outpatient programs, including diagnostic services such as radiology (MRI, CT and mammography), laboratory, cardiology and pulmonary services. Following some minor facility modifications slated for completion by December, the hospital also will offer inpatient and outpatient behavioral health services.

“Our primary goal has always been to deliver services that meet the community’s most critical needs, particularly emergency room and outpatient services. Today, we begin that journey,” said Ronald J. Levy, president and chief executive officer of SSM Health Care-St. Louis. “SSM St. Joseph Health Center-Wentzville will provide quick, convenient access to a variety of health care services while maintaining flexibility for future growth.”

Paul Convery, M.D., interim president of SSM St. Joseph Health Center, St. Charles, will oversee St. Joseph Health Center-Wentzville until Nov. 28. At that time, Sherlyn Hailstone will become president of St. Joseph Health Center, St. Charles; St. Joseph Health Center-Wentzville; and St. Joseph Medical Park. Hailstone, currently executive vice president/chief executive officer of Saint Francis Hospital, a 405-bed community teaching hospital in Evanston, Ill. was named president of St. Joseph Health Center, St. Charles, in October.

SSMHC-St. Louis announced in September that it had reached an agreement in principle with Essent Healthcare to purchase CRMC. The hospital, known as Doctor’s Hospital before being acquired by Essent in 2000, faced intense market pressures that threatened its future. Most notably, CRMC was located in a community with a relatively young population, which made it difficult to sustain a full-service hospital. Essent said in August that it was faced with two options for CRMC: Close the hospital, or find a new partner. SSMHC-St. Louis obtained in October the necessary zoning and regulatory approvals to finalize the purchase.

With 7 hospitals, nearly 2,000 staff physicians and 8,600 employees, SSM Health Care-St. Louis is committed to serving the comprehensive health needs of St. Louis area residents. Sponsored by the Franciscan Sisters of Mary, the health care network includes SSM Cardinal Glennon Children's Hospital, SSM DePaul Health Center, SSM St. Joseph Health Center, St. Charles, SSM St. Joseph Health Center-Wentzville, SSM St. Joseph Hospital West, SSM St. Joseph Hospital of Kirkwood, SSM St. Mary's Health Center and SSM Rehab, plus three medical groups: SSM St. Charles Clinic Medical Group, SSM Medical Group and SSM DePaul Medical Group. Its parent organization, SSM Health Care System, also based in St. Louis, in 2002 became the first health care recipient of the Malcolm Baldrige National Quality Award. The system owns, operates and manages hospitals and nursing homes in four states: Missouri, Illinois, Wisconsin and Oklahoma.

Well folks, in other related news, it was disclosed that they lost money in all but one year of ownership of Crossroads.

Friday, November 11, 2005

Essent, on prowl for hospitals, hires 2 hunters

Roy Moore
Nashville Business Journal

Hud Connery is taking Essent Healthcare back into the hospital acquisition game, aided by a revamped development team.

The $340 million Nashville company has brought in Gregory Schonert and Austin Craun to find development opportunities.

CEO Connery's new executives have backgrounds in REIT financing and health care analysis. He'll need them both because, for every potential deal, the company has to look at a dozen others. "You've got to turn over a lot of stones," Connery says.

Earlier this month, Essent closed on its purchase of Greene County Memorial Hospital, a 54-bed facility near Pittsburgh that has since been renamed Southwest Regional Medical Center. Essent has also expressed interest in a North Carolina hospital HCA is leaving, putting the company in competition for the deal with other area providers.

Industry watchers shouldn't expect Essent Healthcare to morph into a fast-growth company that cobbles together properties across the country. Essent, whose five hospitals could grow Essent into a $400 million company by themselves, was in the running for another Pennsylvania hospital, but walked away because the deal didn't make any sense.

"We remain very deliberate. Some would call us cautious and deliberate, and I don't mind that label," says Connery, who earlier served as chief operating officer at HealthTrust, a Nashville chain that grew to 110 hospitals before merging with HCA.

Essent has garnered that label for adding only a few hospitals while others in Nashville went on spending sprees to piece together portfolios of hospitals. That cautiousness was highlighted in a decision to effectively shut down the acquisition pipeline after the sizable purchase of a hospital in Paris, Texas, nearly two years ago.

After that deal, which brought a lender and investor into Essent, Connery wanted to take a step back and integrate the facility into his company. With that point reached, Essent is returning to acquisitions, but officials aren't forecasting the number of centers they want to add.

The company is unique in the areas it targets. While most of the Nashville chains look for opportunities in the Sun Belt, Essent mostly has shunned those opportunities, believing the prices are too high. Instead, Connery treads into the Northeast and more mature communities, such as Paris, Texas, where the valuations are more reasonable and the returns are just as strong.

Because these areas don't have the growth rates of the Sun Belt, they've been passed over. Plus, there are the high regulatory hurdles that lie in New England. Essent's Sharon hospital became the first for-profit medical center in Connecticut and required the approval of the state's attorney general.

But Schonert, Essent's senior vice president of development, sees opportunities in these areas. They have a good payer mix, a large population and a high number of older residents. In Haverhill, Mass., where Essent owns Merrimack Valley Hospital, there are only four community hospitals for an area the size of Nashville, and Connery brags about transforming Merrimack into a top 100 hospital nationally.

Moving into older areas does bring its challenges, however. All of Essent's hospitals are more than 100 years old and the communities there tend to have a strong attachment to them. Because of their age, these hospitals need a capital infusion to end their runs of losses. "Rarely is a hospital put on the market for sale that's doing well," Connery says.

For these communities, the goal is to keep the hospital open. Don Headlee, chairman of the Greene County hospital board of trustees, says the deal with Essent allowed the community to keep its hospital and benefit from the sale's proceeds. Tough measures were needed to turn the hospital around, including union agreements with the nurses, 50 of whom left on the first day.

"This is a marathon. This isn't a 100-yard sprint," Connery says. "These hospitals are in pretty bad shape. It doesn't get done in a day."