|Reprinted from the January 27,
1997 issue of MODERN HEALTHCARE
Copyright, Crain Communications Inc., 740 Rush, Chicago, IL 60611 All rights
By Bruce Japsen
|Baylor on selling block?
University, health system boards at odds over sale
|The decision by the Baylor University Board of
Regents to consider a merger or sale of Dallas-based Baylor Health Care
System has triggered a Texas-sized controversy over control of the $1.1
billion hospital system.
The decision pits the regents against the healthcare system’s board, which
opposes relinquishing any control of the system to another organization,
particularly an investor-owned hospital chain.
The healthcare system’s president and CEO, Boone Powell Jr., said the system
has been examining affiliations with Dallas-area not-for-profit systems, but
his board isn’t interested in selling to an investor-owned firm.
“The board of trustees has no interest in changing ownership and community
focus and no interest in selling to a for-profit,” Powell said.
Rumored to be waiting in the wings are the country’s largest and second
largest investor-owned hospital chains: Nashville, Tenn.-based Columbia/HCA
Healthcare Corp. and Santa Barbara, Calif.-based Tenet Healthcare Corp.
The not-for-profit system’s strong balance sheet reveals why the chains
would be interested in the system but makes it unclear why the university
would be willing to share or sell the good fortune of the system.
A spokesman for the university only would say that the regents “view a sale
as the best opportunity to keep the system together.”
The system reported net operating income of $47.2 million on net patient
revenues of $587.6 million in 1995, according to MODERN HEALTHCARE’S 1996
Multi-unit Providers Survey.
The system owns or leases eight of the 13 hospitals in its network. The
remaining five hospitals are connected to Baylor through affiliation
agreements, but they aren’t controlled by the system board. The system’s
flagship facility is 804-bed Baylor University Medical Center near downtown
The system’s board and university regents must jointly approve any merger or
sale of the system, but the regents, who appoint the system board members,
acted unilaterally to consider a transaction.
Earlier this month, the regents met in at Baylor University’s main campus in
Waco, Texas. They passed a resolution to consider a merger or a sale and
hired well-known hospital sales consultant Josh Nemzoff of Nashville to help
Nemzoff wouldn’t disclose potential buyers of the Baylor system.
Powell said he and system board members weren’t told who the regents hired
as a consultant until Jan. 17, when Nemzoff unveiled his recommendations,
and system and university officials met in executive session to discuss his
Meanwhile, at least one of Baylor’s hospitals unleashed a publicity campaign
against a sale or merger.
Last week, Baylor Medical Center at Garland (Texas) took out a full-page
advertisement in the Jan. 23 Dallas Morning News urging people to contact
regents by phone or mail, listing their addresses and phone numbers.
It said: “Our mission is to serve the community…not Wall Street.”