Blount Memorial Hospital could become part of South Carolina health system in $364M deal

Blount Memorial Hospital may soon become part of South Carolina’s largest health care organization, Prisma Health. The move would mark the culmination of months of talks with hospital systems on affiliation and is meant to bolster the hospital’s prospects going forward.

If Prisma, a private non-profit, meets obligations outlined in a letter of intent approved unanimously by the hospital’s board Tuesday, July 18, it could become Blount Memorial's first health system partner or affiliate in its decades-long history. Eleven potential partners participated in a wide-ranging search for such affiliates. Events will move relatively quickly from now on: The arrangement with Prisma could close by the end of November.

The letter represents a note that the number of potential partners have narrowed to one: Prisma. But it is not a binding agreement.

Among Prisma’s responsibilities: a $364 million total commitment to invest in the hospital.

For now, the terms on the table would make Prisma or its affiliate the hospital’s sole member. Staff contracts – the pay and benefits agreements currently in place for Blount Memorial employees – are not expected to shift significantly in the near future, according to counsel for the hospital and county. Employees in good standing would stay on staff. Much of current leadership will also be retained.

Covenant, the University of Tennessee and Prisma were the three finalists under consideration. The decision came down to culture, advisors to the hospital and county said, and the proposal would mean a long-term lease of hospital land.

A final contract, if Prisma, the county and Blount Memorial arrive at that point, would take the form of a member substitution agreement. Two partners and a vice president of Juniper Advisory, the investment firm that advised the hospital and the Blount County government on the partner search process, describe in commentary published in The Bond Buyer and to the firm’s website as: “analogous to a stock sale in corporate finance.”

Throughout the piece, the writers refer to the parties of a member substitution transaction as a 'buyer' and 'seller.'

The letter of intent with Prisma is contingent on the approval of the Blount County Board of Commissioners, which will meet later today to discuss the terms.

Through a representative, interim hospital CEO Jonathan Smith acknowledged the county's role in a written statement given to the newspaper after the meeting. Because of the uncertainty, the statement reads in part: "Until the conclusion of the County's meeting, we have no further details or comment to share."

The hospital’s board approved the letter without dissent during their meeting, which was crowded with county officials and Blount Memorial staff.

And the transaction, if approved, will represent Prisma Health’s first foray outside of its home state of South Carolina. The nonprofit currently maintains 18 hospitals, according to information from its website.

This is a developing story. For more information, see the Friday, July 19, edition of The Daily Times.