Pending sale of Sparks Hospital called off

The chair of the Sparks Hospital Board of Trustees said Monday (June 1) it was a “disappointing” but necessary decision to withdraw from the previously announced intention to sell the hospital to Jackson Healthcare.

A deal to sell the financially troubled hospital was announced March 30. Terms of the deal were not disclosed and both parties are aiming to close the deal no later than June 30, 2009, with a May 15 date for a definitive agreement.

Sparks employs about 2,300 and about 115 medical providers, including 98 physicians. The deal would have required the $62 million in public bonds and associated bond servicing fees to be extinguished. The bonds were facilitated for a nonprofit organization through a public facilities board. Any acquisition of a nonprofit by a for-profit requires the public indebtedness to be cleared.

On May 15, the hospital issued a statement saying it had extended the date for signing the definitive agreement with Alpharetta, Ga.-based Jackson.

An inability to secure the long-term financial health of the hospital and “unsettled” financial markets were a few of the reasons given for the Sparks decision to withdraw from the deal.

“As we stated from the beginning, our goals for any transaction were clear: providing the
highest quality health care to the community, continuing employment for our loyal and
dedicated staff, and long-term financial viability to Sparks. It became evident during the
final weeks of our discussions that the details of the transaction were not going to fully
accomplish those goals in a timely manner. Rather than extend the negotiations, we chose to turn our attention to operations,” Judy Boreham, chairwoman of the Sparks board said in a statement. “I’d be less than honest if I said that this is not disappointing. We have a high regard for Jackson Health, and Jackson Health was excited and committed to a potential partnership with Sparks." 

Jackson officials would not discuss the Sparks decision.

“I think the Sparks press release speaks for itself,” Gary Bell, president of Jackson Hospital Affiliates, told The City Wire.
 
Frederick Woodrell, CEO of Sparks Health System, said economic conditions made difficult the proposed transaction.

“The execution of this or any other complex financial transaction is unfortunately compromised by the financial environment,” he said in the statement. “We remain in the lowest economic downturn in the country’s recent history. While both sides were committed to a successful outcome, the circumstances just did not allow for an arrangement that the parties could execute on a mutually acceptable time frame. This was simply a business decision based solely on what was the right thing for Sparks and the community.”

During the March 30 interviews with Sparks and Jackson officials, it was noted that Sparks had many financial and structural options prior to selecting Jackson. The hospital declined Monday to discuss whether the hospital would now pursue other options. Hospital spokesman Chip Paris said the hospital statement would be the only comment provided.

Following is the statement from Sparks:

Sparks Looks to Future
Board Chooses to Discontinue Discussions with Jackson Hospital Affiliates
FORT SMITH, AR. (June 1, 2009) – The Sparks Board of Trustees has announced their
decision to discontinue discussions with Jackson Hospital Affiliates.
 
On March 30, 2009, the Sparks Board of Trustees approved a non-binding letter of intent for the purchase of Sparks by Georgia-based Jackson Hospital Affiliates, a division of Jackson Healthcare, LLC. The date targeted for a definitive agreement was originally May 2009.
 
“As we stated from the beginning, our goals for any transaction were clear: providing the
highest quality health care to the community, continuing employment for our loyal and
dedicated staff, and long-term financial viability to Sparks. It became evident during the
final weeks of our discussions that the details of the transaction were not going to fully
accomplish those goals in a timely manner. Rather than extend the negotiations, we chose to turn our attention to operations,” said Judy Boreham, Chairperson of the Sparks Board of Trustees. “I’d be less than honest if I said that this is not disappointing. We have a high regard for Jackson Health, and Jackson Health was excited and committed to a potential partnership with Sparks." 
 
Frederick Woodrell, CEO of Sparks Health System, echoed Boreham’s comments. "Our
operational plans have resulted in dramatic changes and we don’t see that changing
anytime soon. Patient volumes have increased since the first of the year and nurse and
physician recruiting is going well. It remains clear that the community has been
embracing Sparks as their provider of choice."
 
He continued, “The financial markets remain unsettled. The execution of this or any other complex financial transaction is unfortunately compromised by the financial
environment. We remain in the lowest economic downturn in the country’s recent
history. While both sides were committed to a successful outcome, the circumstances just did not allow for an arrangement that the parties could execute on a mutually acceptable time frame. This was simply a business decision based solely on what was the right thing for Sparks and the community.”