Date:August 8, 2011
SVP, Tenet California
Subject:Recommended purchase of Atascadero Urgent Care
Following a great deal of analysis and strategic planning we are recommending the outright purchase of Central Coast Healthcare, an urgent care facility located in Atascadero, CA, a city of significant patient origin to both Sierra Vista Regional Medical Center and Twin Cities Community Hospital.
While this facility stands on its own as a solid business venture, it is of enhanced strategic value to both hospitals; offensively to acquire a business that is currently profitable and whose business prospects can be greatly enhanced and also defensively to stem the incursion of CHW into the North County.
Today, Central Coast Healthcare sees about 45 patients per day and shows an annual profit of approximately $100,000 (which includes approximately $24,000 in annual rent concessions). It is one of only three primary care offices in a city of about 30,000 people, holds industrial medicine contracts with some of the city’s largest employers and is the single largest source of care provided to CCPN patients in Atascadero. These financial and business successes have been accomplished without a full-time physician, zero marketing and poor street signage. It is our belief that we are able to correct each of these flaws, institute additional business initiatives and grow the business to 64 patients per day in year one and 72 patients per day in year two.
At our request, Outpatient Services Division engaged Value Management Group, LLC d/b/a VMG Health to provide a valuation of the business and its assets. VMG estimated the Fair Market Value of the center to be approximately $598,000. As of last September, the center had about $471,000 of interest-bearing debt and an unrecorded rent liability of about $24,000.. The normalized working capital of the Center is estimated to be approximately $100,000. Based on this information, Tenet can...