Owner of ECM Hospital to merge with Capella Healthcare

RegionalCare Hospital Partners Logo

FLORENCE — The owner of ECM Hospital, RegionalCare Hospital Partners Inc. of Tennessee and Capella Healthcare, Inc. today announced plans to merge the two companies. The new company will have 18 hospital campuses in 12 states with more than 13,000 employees, 2,000 affiliated physicians and $1.7 billion in revenues. The combined company’s name will be RCCH Health Partners (RegionalCare Capella Healthcare).
The transaction, which is conditioned on customary regulatory reviews and approvals, is expected to close during second quarter 2016. Terms of the deal were not disclosed. Day-to-day operations at the companies’ affiliated hospitals will not be impacted by the parent-company-level transaction.

Capella currently operates ten acute-care and specialty hospital facilities in five states: Arkansas, Oklahoma, Oregon, South Carolina and Washington. RegionalCare owns and operates eight non-urban hospitals located in seven states: Alabama, Arizona, Connecticut, Iowa, Montana, Ohio and Texas.

Marty Rash, current Board Chair and CEO of RegionalCare, will assume the role of Executive Board Chair for the combined company. Michael Wiechart, current Capella Board Vice-Chair and President and CEO of Capella, will lead the new organization as President and CEO. He will also join the combined company’s Board of Directors.

“The merger of our two companies will benefit the communities and patients we jointly serve and better position us for the future,” said Rash. “By creating a single, stronger organization, we’ll have greater scale and stability as well as an expanded geographical reach. As we continue to grow the regional systems we have in place now and to partner with new communities, we’ll continue our progress in meeting the triple aim of improving the experience of care for our patients, expanding access, and providing more efficient care.”

“This is a strategic partnership that will enable both of our companies to enhance service and support to our existing community hospitals while creating a new entity that is even more attractive – and better positioned – for future partner communities,” said Wiechart. “Our companies already share a similar mission and values, including a commitment to providing high quality, compassionate care and building strong regionally-focused delivery systems. Additionally, we each place priority on local leadership with all-local Boards of Directors and a decentralized management approach.”

“We are excited to partner with Michael Wiechart and the Capella team and to facilitate the merger with RegionalCare to launch a new chapter of growth,” said Matthew Nord, a partner at Apollo. “Both companies have developed strong regional networks and have a complementary footprint, with no overlap between markets. Apollo is excited to play a role in uniting these two outstanding companies, and we look forward to working with the leadership of the company to further expand services.”

Financing is being provided by Barclays, Royal Bank of Canada, Deutsche Bank, Credit Suisse, and UBS. In addition, senior unsecured notes are being privately placed with PSP Investments Credit USA LLC and other investors. Barclays served as financial advisor to RegionalCare. Akin Gump Strauss Hauer & Feld LLP and Paul, Weiss, Rifkind, Wharton & Garrison LLP served as RegionalCare’s legal advisors. Kirkland & Ellis served as Capella’s legal advisor.

Capella Healthcare, founded in 2005, partners with communities to build strong local healthcare systems that are known for quality patient care. Based in Franklin, Tennessee, Capella operates 10 acute care and specialty hospital facilities in five states.

RegionalCare Hospital Partners, founded in 2009, is a growing system of community hospitals focused on a commitment to high-quality care and expanding healthcare services in non-urban markets. Today, RegionalCare is partnered with eight, market-leading, community hospitals in seven states.

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