Joint corporation formed for new Montclair hospital

Within three years, Baptist Health System (BHS) hopes to open a new replacement facility for Montclair Baptist Medical Center in Birmingham. That announcement was shared with the executive board of the Birmingham Baptist Association on April 11, one day before being released to the public. 
   
To build the new hospital facility, BHS announced it has executed a letter of agreement with Triad Hospitals Inc. to form a joint-venture corporation that will own and manage the new facility. Triad is a for-profit company that operates five hospitals in Alabama. 
   
BHS and Triad will each have an equal number of trustees on the board of the new corporation. Ownership of the new facility, however, is yet to be decided. Initially BHS will own 35 percent of the joint venture, with the opportunity to purchase up to 50 percent of the new corporation within a seven-year window, officials said. 
   
BHS will name the first chairman of the new board of trustees. Triad will assume management of Montclair at the current site as soon as the letter of agreement is worked out.
   
Beth O’Brien, president and CEO of BHS, said Triad has agreed the mission and values statements of BHS would guide the new facility and that the hospital would operate as a faith-based facility, though it would be a for-profit hospital. 
   
“BHS needs the finest facilities in Alabama to go with the finest staff,” O’Brien told executive board members. The new hospital will be state-of-the-art in every way, she promised. The location of the new facility, however, has not been determined. 
   
O’Brien said the uncompleted digital hospital owned by HealthSouth Corporation on U.S. Highway 280 was a possible site. Previously BHS and Samford University announced negotiations with HealthSouth to purchase the facility. But those discussions have proceeded slowly. 
   
With the announcement of the partnership with Triad, Samford University President Thomas E. Corts said the university was withdrawing from negotiations to purchase the HealthSouth property. Samford will now concentrate on its recently announced Health Care Institute, a program of continuing medical education done in cooperation with BHS. 
   
As far as the new Montclair hospital, other possible sites for the new facility include building on the current 100-plus-acre campus on Montclair Road or a new, yet-to-be-determined location. O’Brien emphasized the joint venture involved only the Montclair facility. Previously BHS announced $57 million improvements for Princeton Baptist Medical Center, $56 million for Shelby Baptist Medical Center and $23 million for Walker Baptist Medical Center. 
   
But the needs of Montclair were more than BHS could afford. O’Brien said Montclair continues to lose market share despite the system’s best efforts. The needs of Montclair, as well as the $35 million financial loss in 2004, caused the board of trustees to revisit the future of Baptist Health System during the last few months. Sources said the board had “lively” discussion of all options including selling the system to a for-profit company, closing Montclair entirely or another alternative. “The joint venture with Triad allows us to grow the system,” O’Brien said. “We are not diminishing the care BHS provides for this community in any way.” 
   
James D. Shelton, Triad’s chairman and CEO, said Triad is excited about the venture and the opportunity to extend its services to Birmingham. 
   
Triad is crediting BHS with $100 million in the joint venture for transferring the license to operate the 496-bed Montclair facility and all transferable assets to the new corporation. BHS will continue to own the Montclair property and all the buildings. 
   
O’Brien said she expects details of the joint venture with Triad to be worked out within 120 days. From that point, construction of a new facility should take 24–30 months. (TAB)