For the third time in less than 10 years, Sparks Health System will have a new owner. Little Rock-based Baptist Health System has agreed to acquire the Fort Smith hospital from Franklin, Tenn.-based Community Health Systems (CHS).
A transaction amount was not disclosed in the CHS announcement Wednesday (July 18). The deal is set to close in the fourth quarter of 2018.
“I’m humbled to think of the opportunities we have for the state’s first hospital in Fort Smith to join Baptist Health, the state’s largest and most comprehensive health-care system,” Troy Wells, president and CEO of Baptist Health, said in a statement from Baptist. “It is an honor to align our organization with the outstanding reputation of the entire Sparks family and its team of dedicated physicians and caregivers.”
The move comes as CHS is shedding assets to reduce its highly leveraged debt level. The nation’s second largest hospital operator recently hired Lazard to help it address $4.8 billion in debt set to mature in 2019 and 2020. The company’s long-term debt is around $13 billion, significant for a company that posted a $2.459 billion loss in 2017.
CHS sold 30 hospitals in 2017 for $1.7 billion, and in 2016 spun off 38 hospitals to create Quorum Health Corp. As of December 2017, CHS owned or leased 125 hospitals with 20,850 licensed beds, and employed approximately 2,000 physicians and 1,000 licensed healthcare practitioners.
CHS shares (NYSE: CYH) closed Wednesday at $2.76, up 1 cent. The share price has been on a precipitous decline since June 22, 2015, when the price reached a high of $52.93.
Sparks hospitals and clinics in Fort Smith and Van Buren employ 1,574 employees and about 500 contracted staff and physicians, according to Alicia Agent, director of marketing & communications for Sparks Health System and Sparks Medical Center-Van Buren. In August, though, the Sparks network in the Fort Smith metro area will have 95 “employed providers,” Agent said, which includes physician assistants and advanced practice registered nurses.
In 2017, Sparks Clinic saw just short of 200,000 patients in the clinics, and had an estimated 55,000 emergency room visits in Fort Smith and 22,000 emergency room visits in Van Buren. There are 48 Sparks locations in the Fort Smith metro.
Naples, Fla.-based Health Management Associates acquired Sparks in a $138-million deal that closed Nov. 30, 2009. It was that transaction that resulted in funding for the Arkansas Colleges of Health Education (ACHE), the parent organization of the Arkansas College of Osteopathic Medicine and the College of Health Sciences. The Degen Foundation, a Fort Smith-based philanthropy, was created with some of the revenue from the sale of Sparks to HMA, providing initial ACHE funding to build a $32.4 million facility in east Fort Smith in the Chaffee Crossing area. The school opened in August 2017 and is housed in the three-story, 102,000-square-foot building. A fully operational osteopathic college is expected to serve about 600 students when all four classes are full.
Then, in a deal that closed in early 2014, Sparks was part of the sale of HMA to CHS, a company whose portfolio of hospitals was then nearly double the size of HMA’s portfolio. The $7.6 billion deal closed in early 2014.
CHS still owns four Northwest Arkansas facilities — Northwest Medical Center-Bentonville, Northwest Medical Center-Springdale, Siloam Springs Regional Hospital and Willow Creek Women’s Hospital in Johnson.
John Taylor, a member of the Sparks board when it sold in 2009, believes the deal is good for Sparks. He said he has no inside knowledge of the deal, but said a more financially secure owner is better than being under the debt uncertainties faced by CHS
“I can’t imagine this wouldn’t be good for the hospital and the community to get out from under this cloud of uncertainty,” Taylor said of what CHS is having to do to adjust its debt levels following a few years of weak cash flow. “Just having a stable organization versus a publicly held company that lives quarter to quarter … that has to bring stability and has got to be good for the patients, the doctors and all the employees out there.”
Baptist Health first opened in 1921 as an affiliate of the Arkansas Baptist State Convention. The hospital is now the state’s largest network with nine hospitals – Little Rock, North Little Rock, Arkadelphia, Heber Springs, Stuttgart, BH Rehabilitation Institute, BH Extended Care Hospital, Hot Spring County and Conway. The network also includes a 400-resident retirement village, and the state’s largest schools of nursing and allied health, plus wellness centers and a home health network.
According to Baptist Health, the system is the only Arkansas-based, locally owned and managed, not-for-profit, faith-based healthcare organization. Baptist Health also claims to be the fifth-largest employer in Arkansas and the third largest private-sector employer behind Bentonville-based Walmart and Springdale-based Tyson Foods.
Fort Smith Mayor Sandy Sanders said he is confident Sparks will continue to be an important part of the region.
“For many many years, Sparks has been a key part of our medical community, and with the acquisition by Baptist Health, I anticipate continued excellent service for people in our community.”
Fort Smith Regional Chamber of Commerce President and CEO Tim Allen said Baptist brings a solid reputation to the community.
“Baptist Health is nationally recognized as an excellent health care provider and we are proud to welcome them to the Fort Smith region. Sparks is one of the area’s largest employers and has been a fixture in the area for over 100 years. Combined with our other health care assets, Fort Smith will continue to enjoy being one of the strongest health care communities in the state,” Allen said.