Walton Rehabilitation Health System will be sold for $33 million, according to documents filed with the Georgia attorney general’s office.
Because Walton will retain many assets, including its affordable housing projects, the money will help the Augusta nonprofit continue to serve those with disabilities, Walton CEO Dennis Skelley said.
HealthSouth Corp., the largest owner of inpatient rehabilitation hospitals in the country, is in the process of buying Walton, which would be the company’s first rehab hospital in Georgia.
HealthSouth has 27 hospitals in markets that border Georgia, including five in South Carolina, but none close enough to serve Augusta, which “will be an important market for HealthSouth,” the company said in sale documents reviewed by The Augusta Chronicle.
The acquisition will “allow HealthSouth to serve a new market, complement HealthSouth’s existing network, and be an important start to the continued growth of that network in Georgia,” the documents state.
By the time the sale is completed, Walton would probably be HealthSouth’s 103rd inpatient rehabilitation hospital, Skelley said.
Because HealthSouth is converting a nonprofit to a for-profit, the sale must be approved by the attorney general. That process will include a public hearing, which has yet to be set.
Walton began considering a sale or joint venture in May 2011. According to an analysis by FTI Consulting as part of the sale process, Walton began seeing patient volumes drop in fiscal year 2010 because of “therapists and nursing staff leaving for higher salaries,” the report said.
Walton began seeing higher volumes this fiscal year, though it still projected a $72,000 loss in net operating income for fiscal year 2012, according to records.
The hospital is admitting about 1,000 patients a year, another 1,100 are seen as outpatients, 300 go to Walton Behavioral Medicine Center and 150 to Walton Medical Associates for pain and rehab. HealthSouth has pledged to continue essentially the same services, though it might contract out psychiatric and pain management functions, according to the sale documents.
HealthSouth said it “intends to offer employment to a significant portion” of current Walton employees and in the near-term the medical staff will be “substantially unchanged.”
In its most recent annual filing with the Securities and Exchange Commission included in the sale documents, HealthSouth reported net operating income of $2 billion in 2011 from treating about 118,000 inpatients. The company foresees demand for inpatient rehabilitation will grow by about 2.6 percent per year, according to the filing.
HealthSouth’s initial bid of $30 million to $35 million was well ahead of the next highest bid of $20 million from among five other competitors, according to a presentation to Walton’s board in August. An analysis by Pershing Yoakley & Associates for the sale set Walton’s fair market value at between $14 million and $15.4 million.
Walton will continue to operate Walton Community Services, Walton Options for Independent Living and Walton Foundation for Independence and retains its accessible housing projects.