Re­view slow­ing hos­pi­tal sale

Feds look­ing at whether deal gives St. David’s un­fair edge

Austin American-Statesman - - METRO&STATE - By Mary Ann Roser

The sale of the Heart Hos­pi­tal of Austin, ex­pected to be com­pleted this spring, has been slowed con­sid­er­ably by a fed­eral re­view to en- sure that it does not lead to an un­fair busi­ness ad­van­tage for St. David’s Health­Care.

St. David’s had ini­tially hoped to seal the $83.6 mil­lion deal with Heart Hos­pi­tal by March 31 and be op­er­at­ing the hos­pi­tal by now. But a stan­dard re­view by the Fed­eral Trade Com­mis­sion has lasted longer than an­tic­i­pated, hos­pi­tal of­fi­cials said.

Of­fi­cials at both hos­pi­tals said they re­main com­mit­ted to the ac­qui­si­tion and are op­ti­mistic the deal will go through.

“We’re still in, un­til the de­ter­mi­na­tion is made” by the FTC, said David Laird, Heart Hos­pi­tal pres­i­dent and CEO. Laird and Mark Clay­ton, se­nior vice pres­i­dent of St. David’s, said they have been pro­vid­ing doc­u­ments to the trade com­mis­sion upon request and have no idea how long the re­view will take.

“The time­line is re­ally some­thing they con­trol,” Clay­ton said, re­fer­ring to the FTC. “We’re pa­tiently as­sist­ing in the re­view process, and we con­tinue to be op­ti­mistic in the out­come of that re­view.”

Nei­ther Clay­ton nor Laird was aware of any com­plaints from in­surance com­pa­nies, con­sumers or other par­ties that could be af­fected by the sale. And both said the FTC re­view was not an of­fi­cial in­ves­ti­ga­tion.

Com­mis­sion spokesman Mitch Katz said he could not “con­firm or deny” whether a com­plaint had been re­ceived or whether the FTC was in­ves­ti­gat­ing the trans­ac­tion.

St. David’s and the Se­ton Fam­ily of Hos­pi­tals are the two largest hos­pi­tal sys­tems in Cen­tral Texas and op­er­ate most Austin hos­pi­tals.

Heart Hos­pi­tal, which has 58 beds at 38th Street and North La­mar Boule­vard, is co­owned by MedCath Corp. Based in Char­lotte, N.C., MedCath has a 71 per­cent in­ter­est in the hos­pi­tal; doc­tors who founded it 11 years ago own the rest.

Se­cu­ri­ties fil­ings ear­lier this year said MedCath will get $26 mil­lion from the sale af­ter var­i­ous pay­ments and ac­count­ing pro­vi­sions, in­clud­ing re­pay­ment of $35.3 mil­lion in se­cured debt that the hos­pi­tal owes.

In De­cem­ber, St. David’s acquired Austin Heart, the physi­cians’ group that founded the Heart Hos­pi­tal. Though the doc­tors re­main in­de­pen­dent, the 300 em­ploy­ees of Austin Heart be­came St. David’s em­ploy­ees.

MedCath said in March that it was con­sid­er­ing sell­ing ei­ther its nine other hos­pi­tals or its com­pany. Be­ing bought by St. David’s would clear up any un­cer­tainty about Heart Hos­pi­tal’s fu­ture in Cen­tral Texas and be good for con­sumers, Laird said.

That is among the ar­gu­ments the hos­pi­tal is mak­ing to the FTC, Laird said.

“St. David’s is a per­fect choice for us,” he added. “They have an­nounced their de­sire to fo­cus on qual­ity, they are one of the best em­ploy­ers in the com­mu­nity, we are a strate­gic ac­qui­si­tion to them … and it is good for the com­mu­nity for us not to be un­cer­tain about the fu­ture of Heart Hos­pi­tal of Austin.”

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