COLUMBIA/HCA: JOINT VENTURE WITH SHARP HEALTHCARE CRUMBLES
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Columbia/HCA Healthcare Corp. announced Friday that its joint
venture with Sharp HealthCare of San Diego had "collapsed." WALL
STREET JOURNAL reports that Sharp officials said after a board
meeting Friday that the move was made "to avoid a prolonged fight
with Attorney General Dan Lungren [R], who opposed the deal."
Sharp President and CEO Mike Murphy said, "While seeking judicial
clarification and additional discussions and negotiations with
the attorney general are certainly options, we have concluded
that it would be extremely time-consuming and not in the best
interest of the community or the organization." Lungren praised
the decision in a written statement, saying, "'we felt that the
proposed plan did not' comply with charitable trust law"
COLUMBIA/HCA REAX: Richard Bracken, president of
Columbia/HCA's Pacific Division, said that Columbia/HCA was "very
disappointed with the decision." He said, "We recognize that the
board had a difficult decision to make given the attorney
general's unanticipated interpretation of Sharp's trust documents
and other issues concerning charitable trust law. We continue to
believe that the joint venture that was designed by our
organizations would have not only resulted in a strengthened
Sharp HealthCare organization but would have improved its ability
to continue to provide high-quality care in San Diego. We remain
open to considering future opportunities with Sharp"
(Columbia/HCA release, 2/21).
IMPACT: Robertson Stephens & Co. analyst Sheryl Skolnick
said that Columbia/HCA may have to "rethink its strategy" as a
result of the collapsed deal. According to Skolnick, "Other
nonprofits may be disinclined to negotiate with Columbia ...
fearing that the company will attract a higher level of scrutiny
than other hospital concerns" (JOURNAL, 2/24).