Becker's Hospital Review

33 CFO / FINANCE ProMedica eyes expansion into China By Alia Paavola I n an effort to offset weak revenue growth in the states, Toledo, Ohio-based ProMedica is look- ing to expand into China, according to e Wall Street Journal. Eying a deal in the world's second-largest econo- my, executives from the nonprofit that operates more than a dozen hospitals in Ohio and Michigan have toured hospitals in Shanghai, Shenzhen and Chengdu. Randy Oostra, president and CEO of ProMedica, said the exploration of a new market is a result of a tough economic model in the U.S. as competition shis medical care outside of hospitals and popula- tion growth remains stagnant. "We have to look outside our traditional world if we're going to survive," Mr. Oostra said, according to e Wall Street Journal. ProMedica is considering up to 12 deals in some of the fastest growing cities in China. While the deals are still undecided, Mr. Oostra disclosed that Pro- Medica would either potentially run the hospitals or provide consulting services to the developers of the hospitals. ProMedica's expansion overseas would follow sev- eral other hospital systems, including Nashville, Tenn.-based HCA Healthcare, which entered the United Kingdom years ago; Cleveland Clinic, which is leasing a six-story building and renovating it into a 200-bed hospital in London; Pittsburgh-based UPMC, which acquired a 50 percent state in a pri- vate hospital in Rome; and Boston-based Steward Health Care System, which reached a deal in Feb- ruary to run Malta's two public hospitals and open a third. In addition, Boston-based Brigham Health and Boston-based Massachusetts General Hospital are helping Chinese partners open new hospitals in the country. Cleveland Clinic has also suggested it was looking to enter the China market. e expansion into overseas markets, particular- ly into China, has gained traction in the past few years as a massive healthcare overhaul takes place in China. e rising rates of chronic disease and an aging population has increased healthcare spend- ing, according to e Wall Street Journal. As a result of the overhaul, China said it would allow foreign ownership of some hospitals. n Ascension to sell Connecticut hospital to Hartford HealthCare By Alyssa Rege S t. Louis-based Ascension signed a nonbinding letter of intent to transfer ownership of one of its Connecticut-based assets to Hart- ford (Conn.) HealthCare, the health system announced March 27. Under the letter of intent, Ascension will transfer ownership of Bridge- port, Conn.-based St. Vincent's Medical Center and its related opera- tions to the six-hospital system Hartford HealthCare. The transaction does not include the transfer of Bridgeport-based St. Vincent's College or other mutually agreed upon assets. If the deal is successful, Hartford HealthCare will continue to operate St. Vincent's as a Catholic institution. The transaction is subject to due diligence and necessary regulatory approvals. n Quorum Health's net loss more than triples By Ayla Ellison B rentwood, Tenn.-based Quorum Health ended the first quarter of fiscal year 2018 with a net loss, but the company hopes to im- prove its financial position by restructuring its portfolio. The 28-hospital system, which is a spinoff of Franklin, Tenn.-based Community Health Systems, said operating revenues decreased 7.7 percent year over year to $486.8 million in the first quarter of 2018. The decline was largely attributable to Quorum operating fewer hospitals in the first quarter of 2018 than in the same period a year earlier. The company has sold or closed 10 hospitals since the spinoff from CHS in April 2016. Quorum said a $7.9 million increase in funds from the California Hospital Quality Assurance Fee program partially offset the decline in revenue. After factoring in operating expenses and one-time charges, the com- pany ended the first quarter of 2018 with a net loss of $98.5 million, compared to a net loss of $27.2 million in the same period a year earlier. Quorum is focused on restructuring its portfolio to improve financial performance. Since the company began selling off hospitals in 2016, it has received $84.8 million in net proceeds from divestitures. Quorum used the bulk of those funds — $74.9 million — to pay down the com- pany's debt. Quorum is currently targeting an additional $165 million to $215 mil- lion in asset sales. As of May 9, the company has signed letters of intent to divest seven facilities. Those potential transactions represent net cash proceeds of more than $100 million. n

• Cover