Hospital chain eats up smaller US rival
Print Edition
United States hospital chain Community Health Systems Inc said yesterday that it would buy smaller Health Management Associates Inc for US$3.9 billion to increase its base during the overhaul of the country’s healthcare system.
Both companies’ hospitals are primarily in smaller cities and rural areas. Health Management has a strong presence in the US Southeast, including Florida. Community Health is the second-largest for-profit chain behind HCA Holdings Inc.
Community Health said that based on Monday’s share prices, it would pay US$13.78 per share in cash and its own stock. The deal would give Health Management shareholders a 16 percent stake in the new company.
Health Management shares fell 6.9 percent to US$13.89 before the market opened, while Community Health rose 2.4 percent to US$48.35.
The contingent value right payment depends on the outcome of certain legal proceedings, the companies said in the statement.
Health Management cut its earnings outlook in April, citing weak patient admissions. The company in December was the subject of a “60 Minutes” television news story that described aggressive policies aimed at increasing admissions. Health Management denied the allegations.
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