Canadian Firm to Buy Majority Ownership of Arkansas Surgical Hospital

Arkansas Surgical Hospital LLC of North Little Rock will sell 51 percent of its company to Medical Facilities Corp. of Toronto for $36.2 million.

Medical Facilities said in a news release Tuesday that the current 14 physician-owners will keep 49 percent ownership in the hospital, but 5 percent of that amount will be exchangeable for common shares of Medical Facilities. The transaction is expected to close on Nov. 30.

Arkansas Surgical Hospital CEO Carrie Helm wasn't immediately available for comment Wednesday morning.

The 51-bed ASH at 5201 Northshore Drive, which mainly performs surgeries for patients with back and chronic pain, reported a total patient revenue of $157.7 million and an income of $7.34 million in 2011. In 2010, its revenue was $160 million with an income of $3.2 million.

Medical Facilities owns four specialty surgical hospitals in South Dakota and Oklahoma, as well as an ambulatory surgery center in California.

"Arkansas Surgical Hospital is highly regarded for the quality of its care and services," said Dr. Donald Schellpfeffer, CEO of Medical Facilities, in the news release. "The acquisition of ASH provides significant diversification benefits and is immediately accretive to Medical Facilities. We expect that this acquisition will help us build on Medical Facilities' strong momentum."

ASH opened in 2005 and drew criticism from other hospitals that charged ASH cherry-picked the better paying patients and didn't take uninsured patients.

In 2008, ASH challenged how the Arkansas Insurance Department interpreted the state's "any willing provider" legislation. The interpretation was favorable to insurers and costly to ASH. ASH and other surgical hospitals in Arkansas complained they were being paid less by insurance companies for the same procedures performed at full-service hospitals. The surgical hospitals said they believe that under AWP there should have been some uniform methodology for setting the reimbursement price for a procedure.

The case, which was being handled at the Arkansas Insurance Department, reached an undisclosed settlement in 2011.