Capella Health

Huntsville, Ala. – Huntsville Hospital and Capella Healthcare of Franklin, Tennessee, jointly announced today that Huntsville Hospital has signed a definitive agreement to acquire Parkway Medical Center of Decatur from Capella.  Dan Slipkovich, Capella Healthcare CEO, and David Spillers, Huntsville Hospital CEO, said the deal is expected to be finalized before year’s end and will be effective January 1, 2012.

Both parties are confident this agreement is what is best for Parkway Medical Center because it will ensure a stronger, more collaborative healthcare system for Decatur and position Parkway for a bright future.

According to Spillers, Huntsville Hospital and Parkway have had a strong working relationship for many years. “We serve many of the same patients and even share some physicians, so we are very pleased for Parkway to join our family.  And, with our existing affiliation with Decatur General Hospital, this move will strengthen care in the Decatur community by providing a seamless network,” he said.

“We are proud of how Parkway has grown in the time that Capella has been a part of the community,” said Slipkovich. “Parkway’s employees and physicians deserve a great deal of credit for achieving high marks in quality outcomes and patient satisfaction, despite the economic pressures that have weighed on hospitals nationwide. Together, we have taken care to the next level, adding new services and technology, recruiting new physicians and growing market share. We know that excellent care will continue under Huntsville Hospital’s leadership.”

The announcement comes during a complex and transformative time in the healthcare industry, where the impact of national healthcare reform is driving hospitals and other healthcare providers to consolidate resources. Under reform, close collaborations will be rewarded, and every hospital will be challenged to do more with less.

Add to this that Alabama is one of the toughest reimbursement environments in the nation. In fact, effective January 1, Morgan County, Alabama will have the lowest Medicare wage index in the country. This means that hospitals in Morgan County will be paid the lowest in the nation to treat Medicare patients. It is clear that in the near future, healthcare providers must have considerable size – such as the network of hospitals and providers created by Huntsville Hospital – to survive and thrive in this state.

Added Slipkovich, “This was a difficult decision, but we feel it will help ensure the stability of high quality hospital care in Decatur for decades to come. Huntsville Hospital has a strong network in this region, including seven hospitals and numerous other facilities, and has a long-established reputation for excellence. They are the best partner for Parkway in today’s environment.”

Spillers said he was confident that the new relationship would be successful for patients.
“We’ve demonstrated our commitment to serving local communities through our affiliations with Athens-Limestone Hospital, Helen Keller Hospital in Sheffield, and with Decatur General Hospital,” said Spillers.  “We look forward to working with both Parkway and Decatur General to build on the quality health care services being offered in that community today.”

There will be no disruption in services at Parkway during this transition.  Spillers added, “There are no plans to cutback services at Parkway, and all employees will become part of the Huntsville Hospital system.”

Parkway Medical Center is licensed for 120 beds and employs more than 300 people.  The hospital’s medical staff includes 139 physicians, many of whom also have privileges on the medical staff at Decatur General. Huntsville Hospital and its affiliate institutions represent more than 1,500 hospital beds, 9,000 employees and a thousand physicians across North Alabama.

About Capella Healthcare
Capella Healthcare partners with communities to build strong local healthcare systems that are known for quality patient care. Based in Franklin, Tenn., Capella owns and/or operates 15 general acute-care hospitals in seven states. With the philosophy that all healthcare is local, Capella collaborates with each hospital’s medical staff, board and community leadership to take care to the next level. The company has access to significant leadership and financial resources, investing in its family of hospitals to strengthen and expand services and facilities.

About Huntsville Hospital Health System
Huntsville Hospital Health System is a community-based, not-for-profit organization serving patients in north Alabama and southern Tennessee. Huntsville Hospital Health System is governed by the Health Care Authority of the City of Huntsville and is the eighth largest publicly owned hospital system in the nation. The System includes Huntsville Hospital, Huntsville Hospital for Women & Children, Athens Limestone Hospital, Helen Keller Hospital in Sheffield, Red Bay Hospital, Decatur General Hospital, The Heart Center, Inc. of Huntsville and a multi-specialty physician network. Huntsville Hospital Health System is currently building a 60-bed hospital in the city of Madison.  Affiliate institutions represent more than 1,500 hospital beds and 9,000 employees in the region. For more information, visit www.huntsvillehospital.org.

Certain statements contained in this release may constitute forward-looking statements that involve risks and uncertainties.  These forward-looking statements include all statements that are not historical statements of fact and those statements regarding the company’s or management’s intent, belief or expectations.  Actual future events or results may differ materially from these statements. Readers are referred to the documents filed by Capella Healthcare, Inc. with the Securities and Exchange Commission, specifically the most recent filings which identify important risk factors that could cause actual results to differ from those contained in the forward-looking statements, including execution of growth, acquisition and business strategies. These and other applicable risks are summarized under the caption Risk Factors in Capella Healthcare’s Securities and Exchange Commission filings. We make no promise to update any forward-looking statement, whether as a result of changes in underlying factors, new information, future events or otherwise.