LifePoint Health to merge with RCCH Healthcare Partners
LifePoint Health, the parent company of three regional hospitals in Western North Carolina, recently announced its plans to merge with RCCH Healthcare Partners.
Duke LifePoint — a partnership between Duke University and LifePoint Health — purchased Haywood Regional Medical Center, Harris Regional Hospital and Swain Community Hospital back in 2014, turning all three from nonprofit to for-profit systems.
According to a press release from LifePoint Health, RCCH is owned by “certain funds managed by affiliates of” Apollo Global Management, LLC, a private equity firm.
“We are excited that LifePoint and RCCH are combining to create a national leader in community-based healthcare, and are looking forward to the next chapter of the combined company’s growth,” Matthew Nord, a senior partner at Apollo, said in the press release.
Apollo’s purchase of LifePoint Health is a $5.6 billion deal and is the latest in a series of bets by private-equity firms on health care. Just as the nonprofit health care system Mission Health is in the due diligence stage to be bought out by for-profit system HCA, LifePoint was looking for a way to combat rising medical costs, fewer patient admissions and changing reimbursement policies for Medicaid and Medicare, according to business reports from CNBC.
Rod Harkleroad, CEO of Haywood Regional Medical Center, said the transaction shouldn’t have an impact on the way patients access the hospital, physicians or other locations. He said the hospital’s priority and focus would continue to be providing high quality patient care.
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“Haywood Regional Medical Center views the announcement of one of our owners, LifePoint Health, merging with fellow healthcare leader RCCH HealthCare Partners as extremely positive. The two organizations are aligned and share Haywood’s commitment to ensuring that our community has access to high quality care, close to home,” he said. “We are proud of our contributions to the community and our affiliation with LifePoint. After the merger closes, we believe we will be well positioned to meaningfully extend our mission of ‘Making Communities Healthier.’”
When HRMC sold to Duke LifePoint in 2014 and became for-profit, the proceeds from the sale — some $18 million — were required to go to the county for the purpose of improving health care. The county selected Haywood Healthcare Foundation to manage the funds, but the county hasn’t yet received all the money.
Haywood County’s attorney, Chip Killian, said he’d recently spoken with healthcare transactions attorney Tom Stukes, who’s been working with the county since the Duke LifePoint purchase in 2014. Stukes told him he didn’t expect this latest merger to affect any of the $18 million the county will ultimately receive from Duke LifePoint. Haywood County has already received almost $7 million of that $18 million; the rest will be released in increments through 2020 to ensure that no future liabilities arise.
County Commission Chairman Kirk Kirkpatrick said he expects no changes in the way proceeds from the 2014 sale of HRMC will be distributed.
“It appears to me it’s just this infusion of additional monies that Duke LifePoint will continue to be managed as it is now, except it will be part of a more solvent company. I don’t see any particular changes to leadership locally or overall, so I think it’s probably a good thing for Haywood County,” he said. “If you hadn’t seen the reports of the sale, my guess is you wouldn’t even know it happened.”
LifePoint and RCCH are both leading health care providers based out of Brentwood, Tennessee. According to a LifePoint press release, combining these two companies will mean 2017 revenues of more than $8 billion as well as 7,000 affiliated physicians, about 60,000 employees and more than 12,000 licensed beds.
The merger will give LifePoint a more diversified portfolio of health care assets, including 84 non-urban hospitals in 30 states, regional health systems, physician practices, outpatient centers and post-acute service providers, with leading market positions as the sole community health care provider in the majority of the regions it serves.
The combined company intends to maintain strategic partnerships with well-known leaders in patient safety and clinical quality to bring leading practices in quality and patient safety to each of its communities, according to the press release. The company will continue to be privately held and operate under the LifePoint Health name. William F. Carpenter III, chairman and chief executive officer of LifePoint, will lead the newly merged company.
“LifePoint and RCCH are aligned in our missions and commitment to ensuring that non-urban communities across the country have access to quality care, close to home. Together, we can extend this shared focus while generating new opportunities for growth and partnerships that will help us navigate the changing healthcare industry dynamics,” Carpenter said.
Once the transaction is complete, LifePoint shareholders will receive $65 per share in cash for each share of LifePoint common stock they own, resulting in a LifePoint enterprise value of approximately $5.6 billion, which includes $2.9 billion of net debt and minority interest. The purchase price represents a premium of about 36 percent to LifePoint’s closing share price on July 20, 2018, the last trading day prior to the announcement.
“The opportunity to join with LifePoint marks a significant milestone in RCCH’s history. The size, scale and focus on growth for the new organization will be impactful for our patients, employees and partners. I am thrilled that these two great companies are coming together,” said Martin Rash, chairman and chief executive officer of RCCH.
The transaction should be completed in the next several months subject to customary closing conditions. Under the terms of the agreement, LifePoint may actively solicit alternative acquisition proposals until Aug. 22.
Staff Writer Cory Vaillancourt contributed to this story.
