Columbia / HCA Says It May Sell Some Units

Columbia/HCA Healthcare Corp. has received queries from companies wanting to buy parts of its far-flung network of health-care businesses, Chief Operating Officer Jack Bovender said Friday.

Bovender said in an interview that potential buyers, including HealthSouth Corp., have approached the company but that Columbia isn’t in talks with any of them. In addition to its 342 hospitals and 570 home-health sites, Columbia runs skilled-nursing, rehabilitation and outpatient-surgery businesses.

Nashville-based Columbia, the largest U.S. health-care company, already has put the $1.2-billion-a-year home-health division on the block as part of efforts to resolve a sweeping government probe into its business practices.

Concerns arising from the probe may lead to the sale of other divisions, Bovender said. Some parts might be sold either because they aren’t profitable enough or because Columbia gets offers it can’t refuse.

“If there are willing buyers, it might make for better shareholder value, pure and simple,” Bovender said. The company hasn’t decided whether to sell any of its other units, he said.

One willing buyer is HealthSouth, a Birmingham, Ala.-based operator of rehabilitation hospitals and outpatient-surgery centers. It has expressed interest in buying Columbia/HCA’s outpatient-surgery centers, rehabilitation business, occupational clinics and diagnostic unit.

“We could not only buy them, but run them very well,” HealthSouth Chairman and Chief Executive Richard Scrushy said Friday.

On a day when the Dow Jones industrial average posted its biggest drop in almost six years, shares of HealthSouth rose 31 cents to close at $23.94, while Columbia/HCA shares gained $1.06 to close at $32.38. Both trade on the New York Stock Exchange.

Bovender said Columbia’s home-health division has drawn the attention of other health-care companies. He said the list of potential buyers doesn’t include any hospital companies. He also said Columbia hasn’t received any formal offers and isn’t in negotiations. “This is going to take time to do,” he said. “It’s not a fire sale.”

The home-health business, one of the largest in the U.S., is part of a federal investigation that so far has yielded three indictments of mid-level Columbia/HCA executives on charges of falsifying cost reports for reimbursement by Medicare. The health-insurance program for the elderly accounts for about $7 billion, or 35%, of Columbia/HCA’s annual revenue.

Prosecutors have said the probe is much broader than the three indictments and that the company itself is a target of the criminal investigation. A federal prosecutor said this week that more indictments are likely.

Bovender acknowledged that Columbia/HCA had been in merger talks with Santa Barbara-based Tenet Healthcare Corp., the nation’s second-largest hospital chain after Columbia/HCA. Those talks are on hold, he said.

As for the federal investigation, Bovender said the company’s lawyers are talking with the Justice Department, though Columbia/HCA executives themselves haven’t met with federal authorities. “Our lawyers are talking to Justice, and it’s clear Justice wants to complete its investigation,” he said.

As part of Columbia’s reorganization, a half-dozen top executives have left the company since last month’s resignations of former Chairman and Chief Executive Richard Scott and former President David Vandewater.

On Friday, the company announced the resignations of Samuel Greco, senior vice president for financial operations; Stephen Braun, general counsel; and Herbert Wong, senior vice president for strategic development.