Dallas-Fort Worth is home to more than 8 million people, with 453,000 new residents moving to the area between 2020 and 2023. That growth has prompted facilities expansions at nearly every major healthcare system in North Texas.
California-based The City of Hope just announced that it is in talks to pay $390 million to acquire Boca Raton-based Cancer Treatment Centers of America, a network of oncology hospitals and outpatient care centers.
The deal is expected to close in early 2022, subject to regulatory approval. After close, City of Hope officials plan to convert CTCA to a nonprofit organization.
Combined, City of Hope and CTCA have 11,000 “team members,” which includes collaborating physicians across California, Arizona, Illinois and Georgia.
“City of Hope’s acquisition of CTCA and the transition of CTCA to nonprofit status should enhance and expand its battle against cancer,” said John Balitis, chairman of the Labor & Employment Department at Jennings, Strouss & Salmon PLC law firm in Phoenix. “Unlike a for-profit business that maximizes revenue for distribution to owners, a nonprofit entity recycles what otherwise would be profit back into the entity to further the entity’s mission and purpose. Tax concessions for nonprofits also free up funds for use in pursuing goals and objectives that otherwise would be unavailable in a for-profit setting. Such a change for an organization like CTCA is positive when you consider how vital research and clinical trials are in the cancer treatment industry. In Arizona, where CTCA has four locations, we might expect an expansion in programs as well as facilities as more funds become accessible to further the organization’s goals rather than to be paid out as dividends.”
The combination of City of Hope and CTCA also can provide the combined organization with the economies of scale that reduce operating costs and provide the opportunity to reinvest those dollars into research, technology and other modes of life-saving innovations that can benefit patients, said Joan Koerber-Walker, president & CEO of the Arizona Bioindustry Association.
“With missions that are closely aligned and that put the needs of cancer patients first, this looks to be an excellent opportunity to improve the lives of cancer patients and the people who care about them,” Koerber-Walker said.
Joseph Lupica, chairman of Newpoint Healthcare Advisors LLC, said City of Hope has had a sterling reputation as an outstanding provider in a high acuity setting.
“With today’s emphasis on value-based care, however, if a single-specialty hospitals has a high cost of care to go with all that excellence, they can quickly find themselves on the wrong side of history,” Lupica, a Fellow of the American College of Healthcare Executives, said. “Patients and payers demand value, which considers both quality and cost. This is especially in a market where UCLA, USC and Cedars-Sinai Medical Center all have extremely well-regarded cancer programs, but have a broader base of services.”
The last time Lupica studied that market, he found that City of Hope’s publicly-reported cost per day was almost 40% higher than other hospitals in the San Gabriel Valley, even after adjusting for case mix acuity.
“With this acquisition, maybe City of Hope has found a business proposition that will improve their value equation — quality and cost — by diversifying their base and learning from an efficient company,” Lupica said. “And they can do it without moving away from their core clinical competency.
Source: SFBJ
Montecito Medical Real Estate has recently expanded its Nashville-area footprint with the acquisition of Murfreesboro Medical Properties LLC, the ownership group of a 221,000-square-foot medical office building in Murfreesboro, Tenn.
Murfreesboro Medical Clinic occupied the entire property. Located at 1272 Garrison Drive, the MOB opened as a 78,000-square-foot facility in 2008 and underwent an expansion in 2013 through a build-to-suit second phase that enhanced the property by 143,000 square feet. In addition to clinic space, the trophy asset houses an ambulatory surgery center with four operating rooms.
“We review over $1.3 billion in assets each month and typically pursue only the top five percent that meet our investment criteria,” Joellyn Shannon, a vice president with Montecito Medical Real Estate, told Commercial Property Executive. “We prefer newer, larger assets that are occupied by dominant physician groups or strong health systems with long-term leases and we will pay-up for these attributes, so the seller will make more money, too.”
The physician leaders of MMC, who had been fielding unsolicited offers for the three-story building since construction of the first phase kicked off in 2007, will not only remain tenants in the building, but they’ll also retain an ownership position as a result of their reinvestment in the entity acquiring the asset.
The Murfreesboro MOB marks one of a handful of purchases Montecito has completed in 2019. The company kicked off 2019 with the acquisition of a 110,000-square-foot medical office complex in Clarksville, just outside Nashville. The company’s other purchases this year include a 30,500-square-foot MOB and surgery center in Bedford, N.H., roughly 50 miles north of Boston, and a 42,000-square-foot MOB in Greenwood, Ind., near Indianapolis. And there’s more to come. Montecito has access to approximately $1 billion in capital for additional investments.
“While there are certainly challenges aggregating a large medical office building/ambulatory surgery center portfolio, Montecito is extremely active in the market,” Shannon said.
Montecito and Murfreesboro Medical Properties relied on Anthony Lunceford, Joe Massa and Woody Widenhofer of Colliers International for representation in the transaction.
Source: Commercial Property Executive
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