Hospital accord expected in days
Posted on Wednesday, August 20, 2008
SILOAM SPRINGS — An agreement between the city and Community Health Services to finance a $ 35 million hospital to be built in the next three years will be signed by the end of the week, a city official said Tuesday.
The City Council and the hospital’s board of governors are expected to approve measures giving David Cameron, the city’s administrator, authority to continue negotiating an agreement with the country’s largest publicly traded hospital operator.
Limited details about the preliminary, nonbinding agreement between the city and Community Health Services were made public Monday night in a special joint meeting where company representatives made their pitch.
Serious discussions with the Franklin, Tenn.-based business have been ongoing since May, Cameron said.
Community Health Services is expected to provide the city with an $ 8 million cash payment for construction of the facility. The rest of the construction costs will be paid by the city in a debt issue, with lease of the new hospital used as collateral. Hospital revenue will be used to make bond payments, officials said.
Community Health Services will provide another onetime, estimated $ 10 million payment, representing Siloam Springs Memorial Hospital’s net working capital at the time of the sale, said Rich Bayman, a director with Shattuck Hammond, an Atlanta-based investment bank.
The hospital will be free to use the working capital at its own discretion, he said.
At Monday’s meeting, Community Health Services officials assuaged concerns about the deal falling apart and said it continues building new projects in New Mexico, Utah, Texas and Tennessee in the wake of its $ 6. 86 billion acquisition of Triad Hospitals Inc. in July 2007.
However, the hospital operator continues selling off unprofitable hospitals, including facilities in Hot Springs and Russellville.
Siloam Springs doctors and a nurse visited a 60-bed Community Health Services facility in Shelbyville, Tenn., last week. The month-old hospi- tal impressed the medical staff enough that the doctors gave unanimous support to have the city move forward in its negotiations.
Company officials explained that its construction process sometimes modified existing plans.
“ We’ll take a footprint [of a similar-sized hospital ] and design a hospital ’’ for Siloam Springs, Ken Hawkins, a Community Health Services executive in charge of acquisitions, said at Monday’s meeting. Right now, “ the footprint is what we’re looking at. ’ ’
The community’s needs will also help determine what services will be offered and included in the proposed facility, Community Health Services officials said.
“ We’ve already determined you’re a good fit, ’’ Hawkins said.
In Arkansas, the company operates the Harris Hospital in Newport, Forrest City Medical Center, Helena Regional Medical Center and Medical Center of South Arkansas in El Dorado.
The Siloam Springs hospital will operate independent of the nearby Northwest Health System — a Community Health Services affiliate comprised of Northwest Medical Centers in Springdale and Bentonville and Willow Creek Women’s Hospital in Johnson. Siloam Springs Memorial Hospital representatives have sought a way to build a replacement 72-bed facility since the city can’t afford to build one on its own. Construction of a new medical center has been a hospital board goal for the past 15 years. “ With a very committed buyer and a very committed seller, there’s a very good chance that the acquisition will go through, ’’ said Cole Everett, president of the hospital’s board of governors.
To contact this reporter: lwhalen@arkansasonline. com
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