A 120-bed cardiac care hospital in San Antonio that has been struggling to stay afloat may have a new lease on life.
Officials of the Methodist Healthcare System, the largest healthcare provider in South Texas, announced Monday that they have completed the acquisition of Texsan Heart Hospital from the MedCath Corporation and a group of about 70 physician investors.
The deal, first announced in November 2010 and valued at roughly $78.5 million, puts the hospital in the hands of a national healthcare chain looking to take advantage of healthcare reform and expand the hospital’s services.
“It's a competitive environment with all the (hospital) systems in town,” Jaime Wesolowski, Methodist Healthcare’s president and CEO, told the San Antonio Express News. “They started at 60 beds and added an additional 60 beds. They just weren't able to get enough traction to fill those beds.”
“Our thinking is to add other surgical services, in addition to heart, like orthopedic surgery and some additional general surgery modalities,” he said.
Texsan opened in 2004 and features four operating rooms, four cardiac catheterization labs, an emergency department and a workforce of about 300 people. The hospital has been honored several times for its quality healthcare, receiving awards from HealthGrades, AARP, Blue Cross Blue Shield and the American Society for Metabolic and Bariatric Surgery.
The hospital reported $76 million in net patient revenue and about $67 million in expenses in 2008, while its parent company, Charlotte, N.C.-based MedCath, has lost roughly $100 million over the past two years.
The deal, which closed Dec. 31, 2010, is the fifth by MedCath since company officials announced last March that they were considering selling the entire company or its assets. MedCath has since sold off the Arizona Heart Hospital, Avera Heart Hospital of South Dakota and Heart Hospital of Austin, Texas and has sold a minority interest in Southwest Arizona Heart and Vascular, LLC.
The company now owns six hospitals with a total of 533 licensed beds in Arizona, Arkansas, California, Louisiana, New Mexico and Texas, and also provides services in diagnostic and therapeutic facilities.
"MedCath is thankful to the local physicians who had the vision to bring world-class heart care to San Antonio and southwest Texas, and will always be proud of how it helped make that vision a reality," said O. Edwin French, MedCath's president and CEO. "Methodist Healthcare System brings together many of San Antonio's most respected healthcare facilities. We know the new owners will continue to serve the community well, and we wish them continued success."
Experts say prior to the sale, Texsan faced an uncertain future due to two factors: its high volume of Medicare business (at least 60 percent, according to officials), and the fact that it was partially physician-owned – a form of specialty ownership that is seeing stronger controls under the Patient Protection and Affordable Care Act of 2010.
“There’s no doubt it’s going to put pressure on physician-owned hospital in the future,” said Craig Desmond, Texsan’s CEO, who will remain in that role at the hospital.
Methodist, owned by the Nashville, Tenn.-based national hospital chain HCA and Methodist Healthcare Ministries of South Texas, has been aggressive in its pursuit of new business. Company officials say they’ve had capacity issues at all eight Methodist-owned hospitals in the state and have been spending capital on expansion projects.
The hospital has been renamed Methodist Texsan Hospital to reflect new ownership and plans to add other acute care services.