Becker's Hospital Review

12 CFO / FINANCE Erlanger rejects $475M bid from private equity firm By Molly Gamble S toneBridge Healthcare in August offered $475 million to buy Chattanooga, Tenn.- based Erlanger Health System from Hamil- ton County, but local leaders said there is no plan to sell the safety-net hospital, according to the Chattanooga Times Free Press. e Lahaska, Pa.-based private equity firm an- nounced its founding Aug. 19 and aims to acquire and turn around distressed city and suburban hos- pitals. StoneBridge CEO Joshua Nemzoff told the Chattanooga Times Free Press that Erlanger has been in trouble for a while and needs to be rescued. "We have the talent to do it, we have the financial strength to do it, and that's why they should think of selling the hospital," Mr. Nemzoff said. In a joint statement, Erlanger's management, board of trustees and local elected officials said there are no plans to sell the public hospital and disagreed with StoneBridge's assessment of its finances. Of- ficials said the hospital has more than 100 days of cash on hand and is expected to outperform its current budgeted net income of $5 million. Erlanger board member Jim Coleman told the Chattanooga Times Free Press June 22 that the health system is projecting about $1.1 billion in total operating revenue in fiscal year 2021. State Sen. Todd Gardenhire, R-Chattanooga, called the $475 million offer an "extremely lowball effort" and expressed strong opposition to a hospital sale. "My answer to, 'Should they sell it to anybody?' is not no, but hell no," he told the Chattanooga Times Free Press. Mr. Gardenhire chairs Hamilton County's legis- lative delegation, which appoints four of the 11 trustees who govern the hospital. StoneBridge is backed by Medical Properties Trust, a $20 billion real estate investment trust that owns nearly 400 hospitals, and Oaktree Capital Man- agement, a firm with $120 billion in assets under management. Mr. Nemzoff said the private equity group has been in the making for a while and has had its eye on Erlanger for about one year. e of- fer to purchase Erlanger is StoneBridge's first, the Chattanooga Times Free Press reported. n Hospitals face loss of Medicare payments for defying price disclosure rule By Ayla Ellison B eginning Jan. 1, hospitals across the nation must disclose the rates they negotiate with Medicare Advantage plans. Some hos- pitals considered defying the rule, but a penalty has them re- thinking their decision, according to Bloomberg Law. The initial price transparency regulation included a fine of $300 a day for hospitals that didn't comply with the rule. Some hospitals consid- ered defying the rule because the cost of disclosing the rates would be more than the fine. The American Hospital Association projects it will initially cost hospitals $500,000 a year to comply with the rule, ac- cording to Bloomberg Law. However, CMS' Inpatient Prospective Payment System final rule for 2021, released in September, included a much steeper penalty than originally proposed. The rule said hospitals that don't comply with the price disclosure rule could be denied Medicare payments, according to the report. "There was certainly a sense among hospitals that one way to address the enormous amount of time and resources" required to comply with the rule was to pay the fines, Mark Polston, a partner at King and Spal- ding's healthcare practice, told Bloomberg Law. "That's now changed" with hospitals' Medicare payments at risk, he said. n SSM Health to end trauma, birthing services at Missouri hospital By Alia Paavola S t. Louis-based SSM Health said in September that it will stop treating serious trauma cases, end cardiac and complex neurological surger- ies, and close its labor and delivery unit at St. Joseph Hospital in St. Charles, Mo. "The restructuring is focused in the north and west regions, allowing clinicians in cardiology, neurology and trauma to better focus their re- sources and increase the frequency with which they see certain types of cases," a news release from SSM Health stated. SSM Health said it plans to establish Bridgeton, Mo.-based SSM Health DePaul Hospital as the centralized site for complex surgery and trau- ma cases. Families will be able to access labor and delivery services at SSM Health's DePaul Hospital or SSM Health St. Joseph's Hospital in Lake St. Louis, Mo. "Change is never easy. But by having the courage to do these things now, we can move our mission forward and ensure SSM Health is here to serve our future community's needs for years to come," said Can- dace Jennings, SSM Health's region president, community services division. n

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