Will Jackson Health go private?
For-profit Steward wants publicly run Fla. system
For-profit healthcare opened another major inroad into the not-for-profit world last week with private-equitybacked Steward Health Care System, Boston, offering to buy Miami’s publicly run Jackson Health in a transaction worth at least $1.1 billion.
If the deal comes to pass in about 90 days— both sides say they are conducting intense due diligence—the acquisition of Jackson Health would become the third mega-deal in a year’s time in which for-profit ownership has swooped in where not-for-profit executives in urban markets have floundered financially.
In November, equity firm Cerberus Capital Management cemented an $895 million transaction to buy six-hospital Caritas Christi Health Care in Boston and turn it into Steward Health Care, which now proposes to buy Jackson. Caritas officials had threatened to close two hospitals if the transaction fell through.
The following month, for-profit Vanguard Health Systems bought six-hospital Detroit Medical Center in a $1.3 billion deal. At the time, Detroit’s most recently completed fiscal year ended with only $4.1 million of net income on $2 billion in revenue.
The situation in Miami, however, appears the most dire of the three.
According to public records, Jackson Health’s days cash on hand—a key measure of hospital fiscal health—has continued to dwindle despite cost-cutting efforts by management and multiple audits and investigations from outside agencies.
A Feb. 21 letter from Steward says that under current trends, Jackson is slated to use up all of its available cash by July—one month after President and CEO Eneida Roldan is expected to let her employment contract expire.
Jackson Health ended fiscal 2009 with a loss of $245 million, according to audited financial statements. Results for fiscal 2010, ended Sept. 30, are not yet available, a Jackson spokeswoman said.
Local media reports have quoted system officials at public meetings saying Jackson did better in fiscal 2010, finishing with estimated losses of about $90 million. The system is under investigation by the Securities and Exchange Commission for severely underestimating its unaudited losses shortly before selling $83 million in revenue bonds in August 2009.
The Feb. 21 letter of nonbinding interest