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Capella merging with RegionalCare; will include KH

Posted: March 24, 2016 6:02 p.m.
Updated: March 25, 2016 1:00 a.m.
C-I file photo/

Capella President and CEO Michael Wiechart

Capella Healthcare Inc., which took over KershawHealth as part of a lease/purchase agreement in late 2015, will merge with RegionalCare Hospital Partners Inc. during the second quarter of this year.

KershawHealth is part of the merger. Capella Healthcare President & CEO Michael Wiechart will continue to serve in that capacity as well as joining the new company’s board of directors. RegionalCare CEO Marty Rash will serve as executive board chair. Capella is headquartered in Franklin, Tenn.; RegionalCare in Brentwood, Tenn. Both communities are located near Nashville.

The two privately-owned healthcare service providers announced plans to merge the companies in a press release issued Tuesday. The new company will have 18 hospital campuses in 12 states with more than 13,000 employees, 2,000 affiliated physicians and $1.7 billion in revenues.

The combined company will become RegionalCare Capella Healthcare and be known as RCCH Health Partners.

In an email to the Chronicle-Independent on Wednesday, Wiechart said the merger will not “in any way” change Capella’s agreements with KershawHealth or MUSC Health, with which Capella is partnering in managing the local hospital.

“It will simply result in a stronger partner for all our affiliated hospitals and systems,” Wiechart wrote. “I can assure you that we would not have moved forward with this had we not known that our two companies share a similar mission, vision and values as well as a common strategy of building strong regional networks to provide high quality, compassionate care to our most important stakeholder: our patients. We look forward to keeping you posted as we move forward.”

The companies did not disclose the terms of the deal, and is conditioned on customary regulatory reviews and approvals. The press release claimed day-to-day operations at the companies’ affiliated hospitals will not be impacted by the merger. Capella currently operates 10 acute-care and specialty hospitals in five states, including KershawHealth and Hartsville’s Carolina Pines Regional Medical Center in South Carolina, along with others in Arkansas, Oklahoma, Oregon and Washington. RegionalCare owns and operates eight non-urban hospitals in Alabama, Arizona, Connecticut, Iowa, Montana, Ohio and Texas.

“This is a strategic partnership that will enable both of our companies to enhance service and support to our existing community hospitals while creating a new entity that is even more attractive -- and better positioned -- for future partner communities,” Wiechart said. “Additionally, we each place priority on local leadership with all-local boards of directors and a decentralized management approach.”

Rash agreed.

“The merger of our two companies will benefit the communities and patients we jointly serve and better position us for the future,” Rash said. “By creating a single, stronger organization, we’ll have greater scale and stability as well as an expanded geographical reach. As we continue to grow the regional systems we have in place now and to partner with new communities, we’ll continue our progress in meeting the triple aim of improving the experience of care for our patients, expanding access and providing more efficient care.”

Apollo Global Management LLC facilitated the merger.

“We are excited to partner with Michael Wiechart and the Capella team and to facilitate the merger with RegionalCare to launch a new chapter of growth, Apollo partner Matthew Nord said. “Both companies have developed strong regional networks and have a complementary footprint, with no overlap between markets. Apollo is excited to play a role in uniting these two outstanding companies, and we look forward to working with the leadership of the company to further expand services.”

Financing is being provided by Barclays, Royal Bank of Canada, Deutsche Bank, Credit Suisse and UBS. In addition, senior unsecured notes are being privately placed with PSP Investments Credit USA LLC and other investors. Barclays served as financial advisor to RegionalCare. Akin Gump Strauss Hauer & Feld LLP and Paul, Weiss, Rifkind, Wharton & Garrision LLP served as RegionalCare’s legal advisors, while Kirkland & Ellis served as Capella’s legal advisor.

Several months ahead of the KershawHealth lease/purchase deal being finalized, Capella announced it was being acquired by Birmingham, Ala.-based Medical Properties Trust Inc. for $900 million.

 

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