As expected, Tennessee-based Community Health Systems announced Tuesday morning that it had agreed to purchase Health Management Associates of Naples, owner of St. Petersburg's Bayfront Health System. The deal was valued at $3.9 billion. Community would also assume $3.7 billion in HMA debt.
The two hospital chains had been in talks for weeks, with rumors swirling that HMA — which had only finalized its purchase of the formerly independent hospital Bayfront in April — would be acquired.
The deal was subject to approval by a 70 percent vote of Health Management's stockholders.
"This compelling transaction provides a strategic opportunity to form a larger company with a diverse portfolio of hospitals that is well positioned to realize the benefits of health care reform and to address the changing dynamics of our industry," Franklin-based Community Health Systems CEO Wayne T. Smith said in a statement.
William J. Schoen, HMA chairman, stated: "This agreement represents the successful conclusion of the strategic review process that our board of directors commenced at the end of last year, during which we evaluated several alternatives, including remaining independent and potential transactions with other strategic parties. Our agreement with CHS provides substantial value to our shareholders. We are pleased that this combination will create an even stronger organization for the benefit of our patients, physicians, associates and the communities we serve."
Both hospital chains face ongoing federal investigations.
Community Health disclosed earlier this month it had received a subpoena from the Justice Department as part of a continuing investigation into certain admissions practices at its hospitals. And HMA has indicated the Department of Health and Human Services and the Justice Department have been investigating the company, focusing on physician referrals and the medical necessity of emergency-room tests and certain patient admissions. The company in April received a Securities and Exchange Commission subpoena related to matters including billing write-downs and contractual adjustments.