Inside Baseball – Issue 13 – January 2011
by: Molly Cate | posted January 1, 2011
More than 600 people are signed up for the Nashville Health Care Council’s annual Wall Street event tomorrow at the Convention Center. These days, that’s the size of the average bidding pool for a hospital deal. Amidst the vast sea of handshakes, power suits and red ties, be on the lookout for our free baseball giveaway before the show starts. That way, if you don’t like what the analysts have to say about your company, you’ve got a way to, well, “express your feelings.” It’s much faster than a shoe. (Legal disclaimer: We’re only kidding.)
Deals In Play
Big news: It will be announced today that three of the nation’s leading hospital companies and two major hospital systems – together representing more than 400 hospitals throughout the United States – have invested in the Heritage Healthcare Innovation Fund L.P., a strategic venture fund focused on investments in businesses that improve the delivery of healthcare services. Affiliates of Community Health Systems, Iowa Health System, LifePoint Hospitals, Trinity Health of Novi, MI, andVanguard Health Systems are each limited partners in the fund. The fund will be managed by Heritage Group LLC, the privately-held investment and advisory firm led by serial healthcare entrepreneurs Rock Morphis and David McClellan. Says the press release going out today… “The healthcare reform legislation passed by Congress last year contemplates and encourages innovation in numerous ways. The investors in the Heritage Healthcare Innovation Fund believe that health care delivery systems will be the real-world laboratory for developing solutions in a rapidly changing environment.” Read the full release at www.heritagegroupusa.com.
In case you’ve been under a rock for the past few months, players in the hospital sector are on the hunt for acquisitions. And while deals are happening here and there, what’s been missing from the hospital acquisition scene for a long time is a large-scale system that, in one fell swoop, could instantly add 30 percent market share to a company’s books. Think HCA-Health Midwest. Well, all that is about to change and this time it’s in our fair state. The seven hospital system Mercy Health Partners in Knoxville is seeking a partner. It was Mercy – then St. Mary’s Health System – which bought Baptist Health System of East Tennessee just a few years back. In a Sunday article in The Knoxville News Sentinel, Mercy CEO Jeff Ashin says an internal committee is currently “reviewing nine qualified bids from interested parties that…make up a diverse group of organizations including several with a presence in Tennessee.” Nine bids on the short list? We hear it’s culled from the double-digits. It’s getting crowded out there.
Speaking of acquisitions, insiders say the recent acquisition of Chicago-basedNovaMed for $109 MM cash and $105 MM debt – that’s a big check – is a sign of things to come in the surgery center business this year. A staple of Nashville’s healthcare services mecca, the sector has been relatively quiet until recently. For example, already since the New Year, USPI gobbled up Nashville-based HealthMark Partners – Woody Miller’s company. Also take into consideration that there are big private equity firms like Welsh Carson Anderson & Stowe and Texas Pacific Group behind surgery center companies. We all know they don’t wait around forever … We’re guessing this means good things for Symbion, Meridian and Amsurg … and their attorneys downtown.
Drafts and Trades
For months now, folks have been speculating that Joey Jacobs and his former team from Psych Solutions are gearing up for another company. In their deal to Universal Health, the team walked away with virtually no non-competes (kudos to them) and in typical Nashville fashion, rather than retiring early and chillin’ on beach in the Caribbean, they’re starting a new, similar company. Word has it that the group has secured funding and an announcement is around the corner.
In addition to the former Psych Solutions crew, there are several teams of entrepreneurs lining up to start new hospital companies. And, there are plenty of interested investors looking to put their money at play. With the growth and maturation of local hospital companies, most of whom have reached the size and economy of scale that demands larger hospital targets — the bigger the company, the harder to post revenue gains through acquisitions — insiders say there’s an emerging opportunity for companies that focus on small, rural hospitals. Stay tuned …
Mike O’Neil, former VP of strategy at HealthSpring has left the Medicare advantage plan to start a new venture named Clinically Home. Insiders use words like “innovative” and “progressive” when they talk about the company, so we’re anxious to learn more about it. In its early stages, Clinically Home centers around a “hospital at home” model. Prior to HealthSpring, O’Neil was VP of strategic development ofHealthways.
With the sudden wind down of turnaround consulting firm Bridge Associates last month, 25 + year hospital veteran Mike Miller is a free agent. A former executive atIASIS Healthcare and Community Health Systems, Miller brings deep operational and financial experience from both the for-profit and not-for-profit side. Prior to Bridge, Miller co-founded Centre Health Partners, a Brentwood-based healthcare consulting firm with heavy weights Steve Tisdell and Steve Womack.
In a full-circle move, Tom Pemberton – a former Province Healthcare exec – has gone back to work for Marty Rash, this time at Rash’s RegionalCare Hospital Partners. Pemberton, a veteran hospital operator and former exec at multiple hospital companies around town, joins a whole slew of Province alum, including Sam Moody,John Rutledge, and Christine Craft.
Speaking of hospital companies and development, word has it that attorney Will Morrow is in the process of moving from Waller Lansden Dortch & Davis to head up some sort of new venture in HCA’s development department. Former Waller attorneyJoe Sowell is head of development for the hospital giant, so it’s not surprising he’d recruit a former colleague to One Park Plaza. (Another feather in the team Waller cap.) Speaking of which, will 2011 be the year that HCA finally goes public? Inquiring minds want to know … and follow.
Under The Lens…
The history of Nashville’s for-profit, entrepreneur-style healthcare industry – and its pivotal role in the U.S. healthcare system – is the topic of a new book underway by Nashvillian Tom Wood, who left Nashvillepost.com earlier this month. An avid writer and published author a couple times over (we lost count actually), Wood has an impressive 20 + year journalism career, including stints the former beloved Nashville Banner, as well as the New York Times and Wall Street Journal . Wood intends to have the book published in the summer of 2012, right about the time America will get all riled up about the future of healthcare and the presidential election. Woods is ginning up a Facebook site for the project athttp://www.facebook.com/pages/Nashville-healthcare-history/158323587551268, where you can offer your two cents … and you know you have them.
Former Governor Bredesen’s book “Fresh Medicine,” meanwhile, continues to get rave reviews from the local healthcare community. Healthcare Godfather Clayton McWhorter, who once contemplated a run for Guv himself, thinks the book ought to be required reading for policy makers. We tend to agree. And we only have one question … what’s next, Phil?