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square feet to 379,300 square feet. Approximately 40 percent of
the Hospitals were the only hospitals for the communities they
served, and approximately 20 percent of the remaining Hospitals
were one of two hospitals for the communities they served.
Petitioners acquired or constructed 15 of the Hospitals during
1984, 1985, or 1986. The Hospitals had an average age of
approximately 7.5 years. Prior to its decision to divest the
Hospitals, HCA had invested substantial amounts of capital in the
Hospitals for construction, additions of modern equipment, and
maintenance of physical plants. HCA eliminated 20 hospitals from
the pool of hospitals being considered for divestiture because
those hospitals needed extensive capital expenditures for
construction, modernization, or maintenance.
As a group, the Hospitals had not performed as well
financially as the hospitals petitioners retained. For the year
ended 1986, the Hospitals had operating revenues of approximately
$1.5 billion, operating expenses of $1.3 billion, and net income
of $7.4 million.
During 1987, Bankers Trust Co. (Bankers Trust) suggested
that petitioners sell some hospitals in a leveraged transaction
to a corporation controlled by an employee stock ownership plan
and trust (ESOP). HCA Management preferred a leveraged ESOP
buyout for the divestiture of the Facilities because that type of
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