Metro South News Looks Good
Posted in the Dixmoor Forum
#1 Jan 10, 2012
(Crain’s)—The venture that owns MetroSouth Medical Center is poised to accomplish health care’s version of a real estate flip: selling the 330-bed hospital in south suburban Blue Island for $40 million after making a net investment of about $23 million four years ago.
The deal was financed by a New York private-equity firm whose investments include a troubled Utah ski resort and whose roster has listed some familiar names in Chicago health care: Enrique Beckmann, former CEO of shuttered Michael Reese Hospital, and Arnold Kimmel, who has held the top job at several local institutions, such as Oak Park Hospital and St. Joseph Hospital in Lakeview.
Nearly four years ago, MSMC LLC, a venture financed by Harrison, N.Y.-based Falcon Investors LLC, bought the former St. Francis Hospital & Health Center for $1 from St. Louis-based SSM Health Care Corp. The sale came after SSM announced plans to close the century-old Blue Island institution, at 12935 S. Gregory St., which had been hemorrhaging money for years. With the sale, SSM, which has 15 hospitals, in Wisconsin, Illinois, Missouri and Oklahoma, was looking to avoid a $20-million loss.
Falcon spent another $3 million on lawyers’ fees and other closing costs.
To sweeten the deal, SSM agreed to contribute $9.6 million for working capital, improvements and repairs, according to a copy of the 2008 sales contract, obtained by Crain’s. At the time, Falcon said it would invest $30 million in new equipment and working capital, presumably including SSM’s contribution, and rename the institution MetroSouth.
As a result, when the sale closes sometime in the first quarter, Falcon could rake in about $40 million on an estimated investment of $23 million in a hospital that no one else wanted to buy.
It is uncertain whether MetroSouth is profitable now, although Falcon and the new management team clearly made changes designed to stem the losses.
Whatever the extent of the turnaround, the buyer, Franklin, Tenn.-based Community Health Systems Inc., likely must continue making changes, using the current owners’ recipe.
“If I were coming in as CEO, I’d make sure the hospital had open arms (to physicians) and was open to more specialties,” said Thomas Allison, a restructuring specialist and senior managing director at Chicago-based investment firm Mesirow Financial Holdings Inc.
Thomas Reardon of Franklin, Tenn.-based Transition Healthcare LLC, which manages MetroSouth for Falcon, declines to comment. He also is chairman of MetroSouth’s board. Lawrence Krule, Falcon’s executive vice-president and MetroSouth’s chief restructuring officer, also declined comment.
Financial statements were not available from the privately held hospital. But Illinois public health data show that net patient revenue rose to $154 million in 2010, up 1.3% from $152 million in 2009, the most recent years available.
Falcon invested the $30 million it had planned on improvements and working capital for the hospital, said Mr. Kimmel, who was a Transition executive and MetroSouth’s CEO until late 2009, when he stepped down from both positions.
The hospital has reduced its beds to 330 from 410 at the time of the purchase, according to the state data.
In-patient admissions fell 24% to 10,159 in 2010 from 13,393 in 2007. But the number of outpatients was up 33%, to 103,928 in 2010 from 78,400 in 2007, state data show.
A spokeswoman for Community Health, which owns 131 hospitals in 29 states, including two facilities in Waukegan, did not return calls for comment.
With 1,200 employees, MetroSouth is Blue Island’s largest employer, and the hospital’s survival is critical to the working-class suburb’s economy.
“The fact that they’re going to continue to maintain a local hospital is great for us,” Mayor Donald Peloquin said.
#2 Jan 20, 2012
A huge tax break was provided to the venture that owns MetroSouth........at the expense of Blue Island taxpayers.
#3 Jan 21, 2012
Thanks, Donny. Hometown hero.
#4 Jan 21, 2012
#5 Jan 22, 2012
Based upon the information provided the hospital can easily afford to pay their fair share of property sales tax and property taxes.
#6 Dec 4, 2013
Franciscan St. James Health names new CEO
December 2, 2013 1:58PM
Updated: December 3, 2013 2:09AM
Franciscan St. James Health has named Arnie Kimmel as the hospital system’s new chief executive officer, according to a press release from the health care provider.
Kimmel has extensive experience at reversing the fortunes of struggling health systems across the United States by building stronger physician relationships and optimizing hospital processes while improving their financial outlook, the release said.
In the Chicago area, Kimmel previously was CEO of MetroSouth Medical Center in Blue Island, which went from annual losses of $20 million to break-even in just 12 months under Kimmel, the release said.
“Arnie Kimmel’s record speaks for itself,” Kevin Leahy, president and CEO of Franciscan Alliance, the parent of Franciscan St. James, said in the release.“We sought an individual with Arnie’s credentials and track record at Franciscan St. James. He is the leader this health system needs to navigate the successful restructuring that began several months ago.”
Kimmel also is a former CEO of Catholic Health Partners, a three-hospital system on Chicago’s North Side.
At both MetroSouth and Catholic Health Partners, Kimmel rescued hospitals on the verge of closure, the release said.
Kimmel also was CEO of Mercy Memorial Hospital in Michigan, as well as Brackenridge, Spohn and Children’s Hospitals in Texas. Most recently he was senior vice president of development for Prime Healthcare Services.
“I am excited to begin work at Franciscan St. James,” Kimmel said in the release.“This is a health system with a proud history. My intention is to work to provide an even brighter future. I am eager to roll up my sleeves and get busy. We have a great deal of work to do.”
Franciscan St. James Health includes both its Chicago Heights and Olympia Fields hospitals, and its Franciscan Physician Network and Specialty Physicians of Illinois, with offices in Chicago Heights, Frankfort, Homewood, Matteson and Olympia Fields, the release said.
The Franciscan Alliance said in June that the hospitals need new owners or investors, citing significant losses and lack of a company presence in Illinois.
In September, the hospitals announced they were laying off 125 workers as inpatient admissions continue to decline.
The Franciscan Alliance, based in Mishawaka, Ind., owns the two hospitals and 11 in Indiana.
#7 Dec 5, 2013
I agree with you, Mayor Peloquin should have let the Hospital close too.
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