Capital Medical Center

OLYMPIA, WASH. – Capella Healthcare, the parent company of Capital Medical Center, has signed a definitive agreement to purchase nine general acute care hospitals from Community Health Systems Inc., officials announced today.

Combined, the nine hospitals being acquired by Capella have 1,070 beds and employ nearly 4,000 people. They include:

• Willamette Valley Medical Center, an 80-bed hospital in McMinnville, Ore.
• Saint Mary’s Regional Medical Center, a 170-bed facility in Russellville, Ark.
• National Park Medical Center, a 156-bed facility in Hot Springs, Ark.
• Mineral Area Regional Medical Center, a 135-bed hospital in Farmington, Mo.
• White County Community Hospital, a 60-bed facility in Sparta, Tenn.
• Parkway Medical Center, a 108-bed hospital in Decatur, Ala.
• Woodland Medical Center, a 100-bed hospital in Cullman, Ala.
• Hartselle Medical Center, a 150-bed facility in Hartselle, Ala.
• Jacksonville Medical Center, an 89-bed hospital in Jacksonville, Ala.

“This is a banner day for the Capella team, in that this transaction represents significant growth for our company and our hospitals,” said Daniel S. Slipkovich, Chief Executive Officer of Capella. “CHS is known for running clinically strong, operationally sound community hospitals. We are excited about the opportunity to share our expertise and our resources with these facilities to build on their strong track records.”

Upon completion of this acquisition, the Capella family will include four hospitals in Alabama, three in Tennessee, two each in Arkansas and Oklahoma, two in the Pacific Northwest and one in southern Missouri. Grouping facilities in this way produces great advantages in terms of purchasing, logistics and knowledge sharing.

“It’s very important to emphasize that this expansion will not affect the resources or strategic direction of Capital,” said Tom Anderson, President and co-founder of Capella. “Even with 14 total hospitals, Capella will remain a small, nimble company with the ability to be flexible and accessible to Capital and the Olympia community.”

Capella and CHS are working on the regulatory approval processes and expect to close the $315 million transaction by first quarter 2008. Importantly, funding does not come from the revenues of Capital – or any other Capella hospital. The transaction is being funded by a combination of equity capital from Capella’s partner GTCR Golder Rauner and debt financing led by Citigroup Global Markets Inc., Banc of America Securities LLC and Merrill Lynch Capital.