Neither Louisiana Children's Medical Center nor Ochsner Health System, both based in New Orleans, have the financial strength to lease both West Jefferson Medical Center in Marrero, La., and East Jefferson General Hospital in Metairie, La., a Jefferson Parish consultant has concluded, according to a report from The Times-Picayune.
Consultant Joshua Nemzoff — president of the hospital merger and acquisition service provider Nemzoff & Company — told the Jefferson Parish Council yesterday that Nashville, Tenn.-based Hospital Corporation of America's lease proposal was superior to both LCMC's and Ochsner's bids, according to the report.
HCA pulled out of the lease bidding in February; at the time, HCA MidAmerica Division President Mel Lagarde told the Times-Picayune: "This process has simply gone on for too long, with no appearance of resolution and no end in sight. We are not prepared to continue in this process."
The lease bidding process has spanned more than a year. Ochsner has put forth a $416 million bid for the two hospitals, including a $208 million capital commitment, according to the report. That transaction value will be the same whether or not the health system assumes East Jefferson's $167 million debt. Meanwhile, LCMC has offered $908 million with the debt factored in and $939 million without the debt, including $490 million in capital commitment. Meanwhile, HCA's offer was worth $1.4 billion, according to Mr. Nemzoff.
Mr. Nemzoff noted LCMC hasn't made money from operations since 2007 and has been relying on investment income, although it does have 614 days cash on hand. Meanwhile, he told the council Ochsner had only 71 days cash on hand through the first nine months of last year, putting it at "junk bond level," according to the report.
The Jefferson Parish Council has asked the governing boards at West Jefferson and East Jefferson to submit their lessee preferences to the council by April 8. West Jefferson has expressed a preference for LCMC, according to the report. East Jefferson previously preferred HCA, and it's unclear what the hospital board will decide with HCA out of the running.
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