Fauquier Health to merge with Lifepoint
© Prince William Times / Mar. 8, 2013Fauquier Health reported Tuesday that its board signed a memorandum of understanding (MOU) to investigate a merger with nationwide for-profit health-care provider LifePoint Hospitals.
LifePoint, based in Brentwood, Tenn., owns 57 hospitals in 20 states, including five in Virginia.
Plans call for the creation of a new, as yet unnamed, limited liability company, with LifePoint as the majority owner.
Both Fauquier Health and LifePoint would share in the governance of the new organization, with each having an equal number of members on its board of directors.
"They're niche,” said Fauquier Health president Roger Baker of LifePoint, “is community hospitals like ours.
"These are not huge facilities, but usually where the hospital is the sole community [health-care] provider," he said.
According to its most recent financial information, LifePoint had revenues of more than $3.39 billion and net income of $151.9 million in 2012.
The company's stock price was $44.52/share Tuesday and ranged from a 52-week high of $46.25 and a low of $34.32 over the past year.
Fauquier Health's board of directors began looking for a partner like LifePoint in 2009.
But about a year ago, the search intensified as the board identified about 20 suitable partners, one of which was LifePoint, according to Baker.
"The board developed criteria to evaluate those proposals in things it thought would be important," Baker said. "LifePoint ended up being the entity that we felt best met the criteria we established."
Fauquier Health officials liked what they saw in LifePoint, particularly its strategic vision, according to Baker, as well as views on health-care reform.
LifePoint's support of the local community was really important to the Fauquier board, as was its being able to stay involved in the management of the facility.
"While we're going to be forming a joint venture and they're going to have a majority interest, we're still going to have a 50/50 split in terms of the governance relationship with them," Baker said.
"So we'll have local community leaders, like right now, that are on the board and will have a lot of say in how things are done here," he said.
LifePoint also brings needed investment to the deal.
Fauquier Health says the merger will erase $90 million in debt, as well as provide new capital for expanded services, such as a move into behavioral health services and new technology.
“This proposed joint venture with LifePoint is a very exciting development for our hospital and community,” Marshall Doeller, chairman of the Fauquier Health board, said in a statement released Tuesday.
Following due diligence and a negotiation which will take place over the next several months, both Fauquier Health and LifePoint will enter into a definitive agreement.
That agreement would then be reviewed by the Virginia Attorney General.
Fauquier Health expects to close the deal on the new venture sometime between July and September this year.
"All of the employees here are going to keep their job," Baker said. "We'll be able to keep our brand and our name and utilize our resources."
LifePoint owns five hospitals in Virginia: Clinch Valley Medical Center in Richlands; Danville Regional Medical Center in Danville; Memorial Hospital of Martinsville; Twin County Regional Healthcare in Galax (a Duke LifePoint hospital); and Wythe County Community Hospital in Wytheville.
The new LLC, along with Fauquier Hospital, will become a for-profit entity that will pay both state and local taxes, although, Fauquier Health will remain a nonprofit organization.
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