A Franklin, Tenn., health care company said today it agreed to buy Lake Mead Hospital Medical Center in North Las Vegas.
IASIS Healthcare Corp., which specializes in medium-sized hospitals in high-growth urban and suburban markets, will pay $25 million for the 198-bed acute-care center.
IASIS and Tenet Healthcare Corp., Santa Barbara, Calif., which put the hospital up for sale in March, announced the deal this morning and said the transaction is expected to be completed during the first quarter of 2004.
This is the 14th hospital Tenet has sold since announcing a restructuring in March amid a series of government fraud investigations.
"We are very pleased with the opportunity to purchase Lake Mead Hospital and to broaden our geographic reach and mission of working together with physicians to deliver high quality health care in another community," said David White, chairman, president and chief executive of IASIS.
Tenet officials said in September they hoped to gain a combined $47 million in proceeds for the sale of Lake Mead Hospital and a Houston hospital and the closing of medical centers in Pennsylvania and California.
IASIS, which owns or leases 14 acute care hospitals with a total of 2,028 beds in four regions, a week ago announced plans to sell its Rocky Mountain Medical Center campus in South Salt Lake, Utah, to the Granite School District for $15.2 million for use as a school. That hospital ceased operations in June.
Besides Salt Lake City, the company operates in Phoenix, San Antonio and other Texas cities and in St. Petersburg-Tampa, Fla.
Carl Whitmer, chief financial officer of IASIS, said the sale of the Salt Lake City-area property is not related to the acquisition of Lake Mead Hospital and the company has the financial resources to complete the Lake Mead deal regardless of whether the Utah transaction closes this quarter as planned.
Frank Morgan, a health care analyst with Jeffries & Co. Inc., New York, said IASIS and Lake Mead Hospital are a good match and the company has a good track record in other communities in which it has medical centers.
"I think the Las Vegas market is a prototypical market for them," Morgan said today. "It's a good company, well managed and their CEO, David White, has worked in the for-profit side of health care as well as the non-profit side.
Morgan said the recent sale of the Salt Lake City hospital campus shouldn't raise any concerns.
"It was an asset they acquired in another deal with Tenet that came with a package," Morgan said. "There's nothing there in terms of a red flag on the Lake Mead deal. They're financially stable and have done a remarkable job of turning around some of the hospitals they've bought."
News of the pending acquisition wasn't widely circulated at the hospital this morning.
Nancy Whitman, director of business development at Lake Mead Hospital, had not received official word of the transaction from Tenet executives when contacted this morning.
Whitman said because the hospital has had multiple owners in its 45 years of existence and Tenet has had it for sale since March, most of the center's 700 employees haven't had any anxiety about new ownership.
"It's really not the employees' choice about what happens at that level," Whitman said today. "I doubt if when Steve Wynn sold his properties to MGM that the employees really had much to say about it."
She said most employees have just focused on doing their jobs every day and continue to do their work without worry about the ownership. She had no comments about IASIS.
Lake Mead Hospital reported to the state it had $187,718 in net operating revenue in 2002, down from the $1.3 million it had in 2001. In the last year, Tenet renovated the hospital's lobby and invested $2.1 million to expand its emergency room by 2,600 square feet.
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