Health Central Picks Suitor Orlando Health

OCOEE—In the dog days of summer, a few months after Congress passed sweeping national healthcare reform, the Ocoee-based Health Central Board of Directors made a game-changing decision: merge or sell.

Seeking financial stability, trustees at one of Florida’s few remaining small, independent hospitals had taken action after Health Central CEO Richard Irwin advised them the 171-bed healthcare complex would continue struggling to remain in the black because of its lack of size and clout to negotiate advantageous contracts with health insurers. The need for greater adaptability to new federal health mandates, the “9/11 phenomenon,” and remaining competitive were other reasons why Health Central decided to move in a new direction, said Irwin.

Health Central brought to the table an impressive portfolio in its pursuit of an affiliation with a larger healthcare system: the Ocoee hospital, along with an 80-acre parcel of land at Horizon West, a planned community in the rapidly growing suburbs of west Orange County.

After mulling offers that included buying the hospital, creating partnerships, and promises ranging from an assisted-living center to a new cancer facility, surprising suitors culled on the first cut in November: Naples-based Health Management Associates (HMA), which has two dozen hospitals in Florida including the recently acquired Wuestoff Hospital in Brevard County; and Nashville, Tenn.-based Hospital Corporation of America (NYSE: HCA), the world’s largest private operator of healthcare facilities.

Throughout the holiday season and into the New Year, the 16 members of Health Central’s Board of Trustees pored over the remaining two proposals from local hospital chains, visited hospital campuses, and met with other boards, physicians and administrators. Several times, board members vacillated between Orlando Health and Florida Hospital as their preferred partner for Health Central.

Adventist Health-owned Florida Hospital, which has a higher bond rating, and nearly 1,000 beds at seven hospital campuses scattered around Central Florida, offered a $100 million investment in Health Central. Last summer, Florida Hospital made a play for Bert Fish Medical Center in New Smyrna Beach, a deal that’s now mired in litigation and could have been a sticking point in the decision-making phase.

With 1,882 beds at seven hospitals in Central Florida, Orlando Health, a private, not-for-profit network that includes “disproportionate share” designation and remains Central Florida’s sole qualified participant in the Safety Net Hospital Alliance of Florida, pledged to invest $120 million in Health Central through 2016.

Among the offerings to Health Central: the expansion of cardiology, pediatrics, obstetrics and neurology programs while adding oncology services; keeping pace with federal mandates resulting from sweeping health reform; and remaining competitive while strengthening local community ties.

More specifically, the dowry includes expanding cancer services from M.D. Anderson Cancer Center-Orlando, women's services from Winnie Palmer Hospital, pediatric subspecialists from Arnold Palmer Hospital for Children and Women, and establishing a regional post-surgery rehabilitation center at Health Central for patients recovering from orthopedic and other types of surgery. Also, Orlando Health plans to establish an outpatient pavilion at the Ocoee hospital and hopes to add a rehabilitation facility at the main campus. The current nursing home facility in Health Central Park would be converted to an assisted-living facility.

On the 80-acre site at Horizon West, Orlando Health has discussed building an urgent-care center with a free-standing emergency room, and creating medical office facilities and a rehabilitation or skilled nursing care facility.

On Feb. 22, the board voted 13-3 in favor of Orlando Health. “It’s the right thing to do for the hospital,” reassured Irwin, of merging into an integrated healthcare system.

Health Central trustee Steve Stanford admitted that he struggled with the decision. “What I kept coming back to was, we know what Orlando Health’s intentions are because we’ve worked with them,” he said.

Another trustee, Ken Harker, who wavered several times yet voted to align with Orlando Health, expressed concern about Health Central becoming an outpatient clinic “or a stepchild,” because South Lake Hospital and Dr. Phillips Hospital are located nearby, “but that doesn’t appear to be the intent,” he said.
In a subsequent vote, trustees unanimously approved moving forward with a letter of intent, which should be drafted at the March 17 board meeting. Hammering out the details of a partnership contract is expected to take several months of negotiating. “They’ve promised us … lots of things,” said Carolyn Karraker, who chairs Health Central’s board, “so we have to make sure that we deliver for this community.”

If negotiations stall, Health Central will move to Plan B: returning to the drawing board with Florida Hospital.

Many Orlando leaders weren’t surprised by the decision, particularly because Health Central and Orlando Health have shared cardiology and radiology services for two decades.

“We’ve been engaged but not married,” joked Orlando Health CEO Sherrie Sitarik. “Now it’s time to tie the knot.”

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