Acute Care Industry Review


Reprinted with permission, October 31, 1995

Shands sets deadline for hospital purchases
If AvMed-SantaFe doesn’t take Shands Hospital’s latest offer to buy Alachua General Hospital and five other area hospitals by Thursday, the deal is off, Shands’ top negotiator said Monday.

Meanwhile, negotiators for AvMed-SantaFe have reopened talks with health care giant Columbia/HCA for the sale of AGH and other assets, said Josh Nemzoff, lead negotiator for Shands Hospital. Columbia/HCA owns North Florida Regional Medical Center in Gainesville.

The Shands Hospital board of directors signed off on a final offer last week, Nemzoff said, and it was sent to AvMed-SantaFe.

“If they do not sign it, the deal is off,” Nemzoff said. He said “they know what the deal is, and after 5½ months, it’s time to go forward or part company.” Nemzoff said the deadline is Thursday.

A lawyer for AvMed-SantaFe didn’t look at the proposal with the same urgency.
The AvMed-SantaFe regularly scheduled board meeting is Wednesday. Corporate counsel Steve deMontmollin said Monday that the meeting isn’t being specially held for the offer.

“We’re considering it right now,” deMontmollin said. “That (the deadline) may be their view. We will consider the agreement and make a response.”
deMontmollin said he did not know if AvMed-SantaFe reopened talks with Columbia/HCA but said he “wouldn’t be surprised.”

“What we’re saying is we received an offer, and as soon as we can work through the terms and conditions and make a response, we will,” deMontmonllin said.
McManis & Associates of Washington, D.C., is the lead negotiator for AvMed-SantaFe, but the firm did not return phone calls Monday.

In addition to buying Alachua General, Shands is trying to buy Bradford Hospital in Starke, Suwannee Hospital in Live Oak, Lake Shore Hospital in Lake City, and UpReach and Vista Pavilion in Gainesville – all part of AvMed-SantaFe.

But it is AvMed-SantaFe’s insurance company and health maintenance organization that are the company’s crown jewels, and it became clear that AvMed-SantaFe was at cross purposes. While the HMO worked to keep people out of hospitals and guided them to primary-care doctors, AGH and the other hospitals struggled with their daily counts.
It was inevitable that in Gainesville, with the onslaught of health care reform, that either Shands, North Florida Regional or AGH had to close or change direction, health care experts have said. It wasn’t going to be Shands, a premier teaching hospital in the Southeast, or North Florida Regional Medical Center, a private hospital profitable for Columbia/HCA. AGH’s standing wasn’t good, though AvMed-SantaFe made strides to get it into the black.

Earlier this year, AvMed-SantaFe began talks with Columbia/HCA and Shands for the purchase of AGH and other assets. Shands won the nod and signed a letter of intent July 11 to conduct due diligence.

At the time, there was a possibility that Columbia/HCA would buy AGH and close it to boost its North Florida Regional operation. One other factor was in Shands’ favor: Federal Trade Commission anti-trust considerations.

The letter of intent expired, letting AvMed-SantaFe resume talks with Columbia/HCA.


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