StoneBridge Healthcare offered $475 million to buy Chattanooga, Tenn.-based Erlanger Health System from Hamilton County, but local leaders say there is no plan to sell the safety-net hospital, according to the Chattanooga Times Free Press.
The Lahaska, Pa.-based private equity firm announced its founding Aug. 19 and aims to acquire and turn around distressed city and suburban hospitals. StoneBridge CEO Joshua Nemzoff told the Chattanooga Times Free Press that Erlanger has been in trouble for a while and needs to be rescued.
"We have the talent to do it, we have the financial strength to do it, and that's why they should think of selling the hospital," Mr. Nemzoff said.
In a joint statement, Erlanger's management, board of trustees and local elected officials said there are no plans to sell the public hospital and disagreed with StoneBridge's assessment of its finances. Officials said the hospital has more than 100 days of cash on hand and is expected to outperform its current budgeted net income of $5 million.
Erlanger board member Jim Coleman told the Chattanooga Times Free Press June 22 that the health system is projecting about $1.1 billion in total operating revenue in fiscal year 2021.
State Sen. Todd Gardenhire called the $475 million offer an "extremely lowball effort" and expressed strong opposition to a hospital sale.
"My answer to, 'Should they sell it to anybody?' is not no, but hell no," he told the Chattanooga Times Free Press.
Mr. Gardenhire chairs Hamilton County's legislative delegation, which appoints four of the 11 trustees who govern the hospital.
StoneBridge is backed by Medical Properties Trust, a $20 billion real estate investment trust that owns nearly 400 hospitals, and Oaktree Capital Management, a firm with $120 billion in assets under management. Mr. Nemzoff said the private equity group has been in the making for a while and has had its eye on Erlanger for about one year. The offer to purchase Erlanger is StoneBridge's first, the Chattanooga Times Free Press reports.