Alston & Bird LLP Represented the Consortium of Seven Separate Buyers in Four States In an unexpected and significant turn of events, Columbia/HCA Healthcare Corp. has reversed its aggressive growth strategy and is selling 22 hospitals and related facilities to a consortium of not-for-profit hospitals. The $1.2 billion transaction, involving seven separate buyers in four southeastern states, is the largest purchase to date by tax-exempt hospitals. The international law firm Alston & Bird LLP was chosen by the lawyers of the individual hospitals to represent the Consortium. Commenting on this major shift in the balance of power in the health care industry,
Alston & Bird health care partner J. Vaughan Curtis stated, "The transaction underscores the continued strength and viability of not-for-profit institutions, as well as the power of local communities to control their health care systems."
For Columbia/HCA the sale of the hospitals marks an effort to restructure itself into a smaller player, in the face of a major fraud investigation as well as tremendous hostility from the local communities where it sought to dominate healthcare. The hospitals and related facilities are part of Columbia/HCA’s Atlantic Group, which it had previously announced plans to divest.
The Consortium of not-for-profit hospitals and public entities is comprised of: Alliant Health System, Louisville, Kentucky (purchasing 4 hospitals); Baptist Health, Montgomery, Alabama (5 medical centers); Duke University Health System, Durham, North Carolina (1 community hospital); Eliza Coffee Memorial, Florence, Alabama (3 hospitals); Johnson City Medical Center Hospital, Johnson City, Tennessee (6 hospitals); New Hanover Regional Medical Center, Wilmington, North Carolina (2 hospitals); and Novant Health, Winston-Salem, North Carolina (2 hospitals).
The $1.2 billion transaction is the largest purchase by not-for-profit health care hospitals and public entities to date. Alston & Bird LLP represented the Consortium, which was brought together by Salomon Smith Barney. In turn, each of the individual members of the Consortium were represented by its own counsel with respect to the transaction. While the transaction was negotiated jointly, Columbia/HCA entered into separate purchase agreements with each member of the Consortium. While each of the Consortium members is an independent purchaser with no shared liabilities among the group, Columbia/HCA retains the right not to complete the transactions unless and until the conditions to close a specified number of the facilities have been met.
Expected to close in the third quarter of 1998, the transaction is not contingent upon financing conditions, but is subject to customary state regulatory, antitrust and certain other approvals.
The Alston & Bird team representing the lawyers for the Consortium includes Corporate Health Care partners J. Vaughan Curtis and Jonathan W. Lowe, and counsel
Christopher S. Morter, all in Atlanta.
Salomon Smith Barney’s Health Care Finance Group co-heads Fred Hessler and
David Cyganowski are acting as financial advisors to the Consortium.
Goldman, Sachs & Co. is acting as financial advisor to Columbia/HCA.
Alston & Bird, with more than 400 attorneys serving both domestic and international clients, is one of the largest and oldest law firms in the Southeast. Based in Atlanta, Georgia with offices in Washington D.C., Charlotte and the Research Triangle in Raleigh, North Carolina, the Firm provides a full range of services to clients doing business throughout the U.S. and overseas. Alston & Bird’s practice areas include: health care transactional and regulatory matters; capital markets and investments; finance and public finance; financial institutions; international; intellectual property; technology; trial and appellate; real estate; environmental; antitrust and investigations; bankruptcy, reorganizations and workouts; tax and fiduciary; and labor and employment.