Private equity firm makes bid for Erlanger Health Sytem

Anew private equity-backed hospital turnaround firm last week made a $475 million bid for Erlanger Health System. StroneBridge Healthcare, which was formed this year and is headed by a group of former Tenet Healthcare Corp. executives, would pay $200 million for Erlanger’s six Tennessee acute-care hospitals and affiliated operations and commit $275 million for capital improvements and to fully fund the $80 million employee pension fund shortfall.

“StoneBridge has been tracking the situation at Erlanger for over a year and we believe that now is the time for us to act and offer our assistance to Erlanger, safeguarding its legacy as a vital institution for the region,” StoneBridge CEO Joshua Nemzoff said in prepared remarks. He said the investment will help Erlanger “survive and thrive” against two major players in its market—HCA Healthcare and CommonSpirit Health.

Chattanooga, Tenn.-based Erlanger—an academic medical center that’s affiliated with the University of Tennessee and Vanderbilt University—recorded a

$3.7 million operating loss on operating revenue of $1.07 billion in 2019, according to Modern Healthcare’s financial database. For the quarter ended March 31, the health system reported $4.2 million in operating income on revenue of $277.8 million with 62 days of cash on hand, up from operating income of $2.7 million on revenue of $268.6 million with 59 days cash on hand from the same period last year. But fiscal year to date, Erlanger recorded a $4.4 million operating loss.

Suspending elective procedures in March caused Erlanger’s revenue to plummet 30% to 40% in a matter of days, leading to the elimination of nearly 100 nonclinical positions, among other cost-cutting measures stemming from the COVID-19 pandemic.

Erlanger brought back furloughed staff in June and restored full work schedules. The company reinstated paid time off accrual and retirement plan contributions in July and restored full executive salaries in August.

StoneBridge committed to hiring “substantially all of the hospitals’ active employees in good standing” if the deal goes through, according to the letter of intent. It also pledged to continue operating the hospitals “in the ordinary course of business consistent with past practice.”

StoneBridge would not be able to “remove or transfer any of the assets, except in the ordinary course of business, make any material change in the business or operations of the hospitals, or enter into any significant contract, commitment or transaction with respect to the hospitals or the assets” without Erlanger’s prior written consent, according to the letter of intent. ●

NORTHEAST UPMC says China hospital deal is on track

UPMC officials said their plan to eventually operate five hospitals in China is on course despite the COVID-19 pandemic’s effects on its partner in the effort.

The Wanda Group, a massive multinational conglomerate based in Beijing, specializes in real estate and film. Its umbrella of operations includes hundreds of movie theaters, malls and hotels that were forced to temporarily close during the pandemic. But Pittsburgh-based UPMC said the team still plans to open its first hospital in mid-2022 in Chengdu.

“We’ve been working very hard throughout the pandemic to keep the project on track,” said Jeff Bernstein, senior vice president of UPMC International and its country manager for China. UPMC announced the venture with Wanda last October.

Wanda, also known as the Dalian Wanda Group, operates about 250 malls in China and is among the largest mall operators in downtown Wuhan, a city of about 11 million people where the earliest cases of COVID-19 were reported.

While Wanda’s operations in China were “heavily impacted” during the shutdown, the company has since been able to bounce back, especially given China’s rapid pace of recovery relative to other countries, Bernstein said.

This is Wanda’s first foray into healthcare. The company will fund the hospitals’ construction and operating costs and will pay UPMC to manage the facilities. The first hospital in Chengdu, about a 700-mile drive from Wuhan, is under construction and the estimated completion date has not been pushed back.

SOUTH Oscar partners with Florida health organizations to launch Medicare plan

Health insurance company Oscar is linking with Holy Cross Health hospital in Fort Lauderdale and Memorial Healthcare System in Hollywood to launch a co-branded Medicare Advantage plan in South Florida.

Pending approval, Oscar will be able to start marketing the plan Oct. 1 and selling it Oct. 15, said Ananth Lalithakumar, Oscar’s vice president and general manager of Medicare Advantage. He declined to disclose the projected reach of the new plan but noted that some of its competitors in the Medicare space have about 60,000 to 70,000 members.

Oscar, based in New York City, has approximately 70,000 members in South Florida in its individual and family plans since its entry into the region six months ago, and 121,000 members across the state. This would be Oscar’s first co-branded Medicare Advantage plan outside New York.

WEST Renown Health, University of Nevada at Reno med school plan partnership

Reno, Nev.-based Renown Health and the University of Nevada at Reno School of Medicine are partnering to focus on medical education and clinical research.

The organizations signed a letter of intent and expect to finalize an agreement by year-end.

“We share a common vision and recognize how expanding our collaboration will benefit the community through increased access to care and expanded clinical training and research programs. We know we can do more together than we would be able to do separately,” Dr. Thomas Schwenk, dean of the UNR School of Medicine, vice president of health sciences and a professor of family and community medicine, said in a prepared statement.

The medical school and Nevada’s largest health system have collaborated for 50 years on research, education, public health grant funding, clinical trials and integrated clinical practices. More recently, they teamed up to care for patients during the COVID-19 pandemic, said Dr. Anthony Slonim, CEO of Renown Health and a professor of clinical medicine and pediatrics at UNR School of Medicine.

Schwenk will present the letter of intent to the Nevada System of Higher Education Board of Regents on Sept. 11. If approved by the board, there will be a period of review and due diligence before a final agreement is made, according to a release.

We know we can do more together than we would be able to do separately.” Dr. Thomas Schwenk, dean of the UNR School of Medicine