ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Thursday, December 5, 1996 TAG: 9612050016
SECTION: BUSINESS PAGE: B-6 EDITION: METRO
SOURCE: SANDRA BROWN KELLY STAFF WRITER
A not-for-profit company headed by a former Salem hospital administrator is seeking $115 million in tax-free bonds to buy 10 Heritage Hall nursing homes from HCMF Corp. in Roanoke.
The homes, with a total of 1,431 patient beds, had net revenue of $37.9 million in 1994, according to data HCMF reported to state regulators.
The Heritage Hall facilities in the sale include one in Blacksburg and several in Southwest Virginia. The buyer is Virginia Long-Term Care Foundation Inc., which has been incorporated by The Trousdale Foundation Inc. of Nashville, Tenn.
Trousdale's president is Sam Owen, who was administrator at Lewis-Gale Medical Center in Salem from 1973 to 1979.
As part of the sale agreement, HCMF will continue to manage the nursing homes for at least five years.
HCMF owns 17 Heritage Hall properties.
The facilities being sold are in Blacksburg, Blackstone, Big Stone Gap, Clintwood, Dillwyn, King George, Leesburg, Nassawadox, Tazewell and Wise. HCMF will continue to own Heritage Hall nursing homes in Brookneal, Charlottesvile, Front Royal, Grundy, Laurel Meadows, Lexington and Virginia Beach.
Neither Owen nor HCMF Chief Executive Officer Keith Green would comment on the background of the transaction. Green said the price was right. Many of the nursing homes involved are almost 20 years old, he said.
The Heritage Hall properties are the foundation's first nursing-home purchases, but if the business goes well, others likely will follow, Owen said.
Owen said Trousdale Foundation was set up with the intent of getting into the health care business, and the tax-free bonds were a good way to do it. He said he started his project in Virginia because the opportunity to buy arose and because he's familiar with the area.
He said the $115million in bonds represent the full purchase price.
Industrial development authorities in localities where the nursing homes operate must give approval for the revenue bonds to be issued. The authority in Blackstone would actually issue the bonds. They have been approved by half of the communities, including Montgomery County. The communities have no financial liability in the proposed transaction but their endorsement of revenue bonds means the sale represents economic development for their localities. The tax exemption benefits investors who buy the bonds, meaning they do not pay taxes on revenue generated from the investment.
Owen said he hopes the deal can be closed in the first quarter of 1997.
Joining Owen on the board of the Virginia Long-Term Care Foundation is Roanoke insurance broker Steve Musselwhite, whom Owen said is a long-time friend.
Other board members are Michael Hudak of Stow, Ohio; Dr. Timothy Binder of Hamilton, Mont.; and David W. Wilds of Nashville. Owen said other board members will be chosen.
Owen left Lewis-Gale to take a regional position with Hospital Corporation of America, which then owned the Salem hospital. He later was named senior vice president for development at HCA, but left the company in 1989 to become chief executive officer of Cumberland Health Systems Inc.
Cumberland, a Tennessee company, owned and managed mental health treatment facilities and medical/surgical hospitals. It was bought by First Hospital Corp. of Norfolk in 1994.
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