THE VIRGINIAN-PILOT
Copyright (c) 1994, Landmark Communications, Inc.
DATE: Tuesday, November 29, 1994 TAG: 9411290268
SECTION: BUSINESS PAGE: D1 EDITION: FINAL
SOURCE: BY LON WAGNER, STAFF WRITER
LENGTH: Short : 48 lines
First Hospital Corp. grew by 25 percent Monday with its acquisition of Nashville-based Cumberland Health Systems, a $40 million psychiatric system with hospitals in three states.
Norfolk-based First Hospital, a privately held company founded by Dr. Ronald I. Dozoretz, added about 1,000 employees to its fold with the buyout. First Hospital now employs 4,300 people.
Through Cumberland, First Hospital added inpatient psychiatric facilities in Boston, Mass.; Hopkinsville, Ky.; and Nashville, Knoxville and Chattanooga, Tenn. First Hospital also acquired six medical clinics in Massachusetts.
First Hospital executives said there would be no immediate changes in management or facility names.
``They're actually positioned very well,'' said Ed Irby, FHC's chief operating officer. ``It's a good fit for us, culturally as well as size-wise.''
Cumberland was formed in 1982, one year before Dozoretz founded First Hospital. First Hospital has 18mental health and addiction treatment centers in the United States and Puerto Rico, and its Options Mental Health division provides managed mental care insurance coverage to 2 million people.
Options Mental Health holds the contract to provide mental health services to Massachusetts state employees. Cumberland's Boston-area hospital is the first such facility that First Hospital owns in that state.
Dozoretz, president and CEO of First Hospital, said that the Cumberland buyout gives FHC the chance to expand into Boston and several other growing metropolitan areas. Terms of the deal were not disclosed.
Cumberland CEO Samuel W. Owen said that joining a larger company will give Cumberland a foothold in the fast-moving market realignment in the health care industry. ``The combined resources of both companies will provide greater operating leverage in the challenging mental health environment as it is impacted by managed care,'' Owen said.
The acquisition means First Hospital will have estimated annual revenues of about $200 million, the company said. Dozoretz predicted that Cumberland would not be the last operation to join First Hospital.
``This is just one part of an expansion program for all parts of mental health care the company is involved in,'' Dozoretz said. ``You'll be hearing some other stuff we'll be doing, both facility-based and nonfacility-based.'' by CNB