A brand new personal fairness agency aiming to buy and switch round financially distressed city and suburban hospitals has provided $475 million to purchase Erlanger Well being System from Hamilton County.
In a letter of intent to county Mayor Jim Coppinger dated Aug. 20, Joshua Nemzoff, chief government officer of StoneBridge Healthcare, wrote, “Erlanger Well being System is a well-respected group and offers excellent care to space residents.”
Nonetheless, Erlanger’s funds had been “not optimal” before COVID-19 and have additional deteriorated all through the pandemic, Nemzoff wrote.
“It has been in hassle for some time, and any individual wants to assist repair this hospital, and we predict we will do it. We’ve got the expertise to do it, we have now the monetary energy to do it, and that is why they need to consider promoting the hospital,” Nemzoff mentioned in an interview with the Instances Free Press.
In response to StoneBridge’s proposal, Erlanger administration, the hospital’s board of trustees and native elected officers mentioned in a joint assertion that there are not any plans to promote Chattanooga’s public security internet hospital, which is the area’s solely tutorial medical middle and largest supplier of indigent care.
“The unwavering place that Erlanger isn’t on the market is shared by the hospital board, Mayor Coppinger and the Hamilton County delegation,” board chair Linda Moss Mines mentioned within the assertion. “Erlanger is crucial to our group and can proceed offering distinctive care to all residents. Our area has relied on Erlanger for over 125 years, and we’ll proceed to be right here for our sufferers.”
Coppinger echoed Mines’ sentiments in an interview with the Instances Free Press.
“They’re [Erlanger] extraordinarily essential to the group,” he mentioned. “In order that’s the place we’re — there isn’t any consideration given to the sale of Erlanger.”
Financial fallout from COVID-19 has dealt a devastating blow to the hospital trade, particularly safety net hospitals such as Erlanger.
Letter to Hamilton County Mayor Jim Coppinger
The well being system final 12 months supplied about $135 million in uncompensated medical care by treating excessive volumes of uninsured and under-insured sufferers, a document that Erlanger administration projected to beat in 2020 earlier than the pandemic struck.
Erlanger competes towards two massive firms with deep pockets — Nashville-based HCA Healthcare, a $50 billion well being care system that owns Parkridge Well being, and CommonSpirit Well being, a $20 billion nationwide Catholic well being system that owns CHI Memorial.
Nemzoff mentioned in his letter to Coppinger, “To ensure that Erlanger to outlive and thrive towards these techniques, they want important assets. StoneBridge Healthcare may help. We’ve got the experience, the assets and the monetary energy to supply all the issues that Erlanger must compete and succeed.”
Nemzoff’s letter got here a day after StoneBridge publicly introduced the formation of the corporate in a information launch. Pennsylvania-based StoneBridge is led by a gaggle of longtime well being care executives and backed by Medical Properties Belief, a $20 billion actual property funding belief that owns practically 400 acute care hospitals, and a worldwide funding supervisor known as Oaktree Capital with $120 billion in property beneath administration, based on the information launch.
Nemzoff mentioned that though the corporate was simply introduced, it was formally shaped in Could and has been within the making for longer. The group started eyeing Erlanger a couple of 12 months in the past. The supply to buy the hospital is StoneBridge’s first, and the group is speaking to different hospitals as properly, he mentioned.
Erlanger officers mentioned the idea that the hospital is struggling financially “is solely not true.”
“Erlanger is anticipated to significantly outperform its present budgeted internet earnings of $5 million,” based on the system’s assertion. “Erlanger’s days of money readily available exceed 100 days, a big enchancment throughout 2020.”
Dr. Will Jackson, president and CEO of Erlanger Well being System, mentioned in an announcement, “With out Erlanger working as the general public’s non-profit, safety-net hospital, hundreds of individuals wouldn’t obtain the care they want.
“Erlanger has an honorable mission via the dedication of all 6,600 associates to make Chattanooga and the encompassing areas a greater and more healthy place to stay and work,” Jackson mentioned.
Nemzoff mentioned it is exhausting to get an correct image of the place hospitals stand financially at the moment, given the federal government subsidies they’ve obtained to offset the prices of COVID-19.
He additionally known as the notion of for-profit firms slashing non-profitable providers and indigent care an “huge false impression” and mentioned StoneBridge would have the ability to fund wanted capital to enhance the hospital. He cited Erlanger’s $75 million want for capital enhancements, which he mentioned Stonebridge would totally fund. His letter famous that Erlanger was solely planning to pay $20 million towards these wants.
“Our complete mission, if you’ll, is to broaden the supply of care and the standard of care, which is why we selected city and suburban hospitals,” Nemzoff mentioned. “We’re speaking about placing $275 million into this facility over the following 5 years. In order that’s gonna have an unlimited impression on care.”
Nemzoff’s letter known as his supply unsolicited. He informed the Instances Free Press he has met twice with Coppinger.
State Sen. Todd Gardenhire, R-Chattanooga, chairman of Hamilton County’s legislative delegation, known as StoneBridge’s supply an “extraordinarily lowball effort.”
Though the state has no possession in Erlanger, the delegation appoints 4 of the 11 trustees who govern the hospital.
Gardenhire cited situations during which different group hospitals — akin to the previous Bradley Memorial Hospital in Cleveland, Tennessee — bought to personal, for-profit firms solely to proceed dealing with monetary hardship.
“Do we wish Erlanger to fall in that very same class?” Gardenhire mentioned. “My reply to, ‘Ought to they promote it to anyone?’ isn’t no, however hell no.”
Contact Elizabeth Fite at [email protected] or observe her on Twitter @ecfite.