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Business & Technology

Wellmont buying hospitals in Norton, Pennington Gap

June 5th, 2007 12:00 am by Rick Wagner

Wellmont Health System is buying two Southwest Virginia hospitals, the latest in a series of buyouts by the health system.

Sullivan County-based Wellmont and Naples, Fla.-based Health Management Associates on Friday formalized an agreement for HMA to sell Mountain View Regional Medical Center in Norton and Lee Regional Medical Center in Pennington Gap.

"The Southwest Virginia market is an important market for Sullivan County, not just in health care but for other businesses," Dr. Richard Salluzzo, president and chief executive officer of Wellmont, said at a Monday morning news conference.

Salluzzo said closure on the deal, pending regulatory approval, is expected by Aug. 1.

Wellmont has owned Lonesome Pine Hospital in Big Stone Gap for a decade.

"We are impressed by Wellmont Health System's unwavering commitment to quality and patient safety, and we are confident Mountain View Regional Medical Center and Lee Regional Medical Center will continue to thrive as part of the Wellmont family," HMA officials said in a written statement. "This was a competitive bidding process and, while we received comparable bids, we concluded Wellmont was the best fit for these two hospitals and the communities they serve."

Mountain States Health Alliance, based in Johnson City, discussed buying the Lee and Mountain View hospitals about six months ago, said MSHA Vice President of Communications and Marketing Ed Herbert.

However, Herbert emphasized that MSHA was never in a competitive bidding war with Wellmont or any other health care group.

"It wasn't a bidding situation," Herbert said, adding that MSHA officials explored the idea because it is in the process of owning a 50 percent share and helping operate Norton Community Hospital and Dickenson Community Hospital, a deal he said may close in September.

"There was not a competitive back-and-forth bidding" involving MSHA buying the Lee and Mountain View hospitals, he said.

As for Wellmont, Salluzzo said the two new acquisitions will help form a synergy while paying for themselves.

"These hospitals will fund themselves," Salluzzo said, emphasizing that the purchases would not take money away from the $100 million Project Platinum project at Holston Valley Medical Center or other Wellmont projects. "It's like buying a hospital that pays its own mortgage."

Salluzzo declined to give the purchase price and also said it was too early to say anything about consolidating services.

"We have not tried to shrink to greatness," Salluzzo told reporters after the news conference.

However, he said that likely in the future, if a neurologist is needed that position would serve Wellmont at Lee, Mountain View and Lonesome Pine.

He said the hospitals in Lee and Wise counties are a good fit for Wellmont and will help make for more seamless patient transfers from Southwest Virginia to Holston Valley and Bristol Regional Medical Center.

"We'll also be able to export our brand of service and safety," Salluzzo said during the news conference.

Mountain View Regional Medical Center, a 133-bed facility formerly called St. Mary's Hospital, was purchased by HMA in 2005 for an undisclosed sum from Marriottsville, Md.-based Bon Secours Health System. That hospital has operated since 1948, and CEO Jamie Guin said it employs just less than 300.

Lee Regional Medical Center, formerly Lee County Community Hospital, was purchased in bankruptcy for $24.9 million by HMA in 2001. It has 80 beds and went into bankruptcy after financial mismanagement that resulted in prison terms for some then-hospital officials. That hospital has operated for more than 70 years. CEO Jim Jeansonne could not be reached for comment Monday.

Patrick Kane, senior vice president of marketing communications for Wellmont, said Wellmont will be able to help the two newest hospitals with physician recruitment and capital, both difficult areas for independent community hospitals.

Wellmont on May 1 formally completed its majority acquisition of Takoma Regional Medical Center, the former Takoma Adventist Hospital, in Greeneville. Wellmont is the majority owner of a nonprofit corporation that owns the 108-bed hospital. That plan was announced in December.

Wellmont in early May announced it was buying Jenkins Community Hospital in Letcher County, Ky., for an undisclosed sum from businessman Gregory Johnson. The closure of the Jenkins deal is expected by mid-July, Wellmont officials have said.

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