The University of South Alabama Board of Trustees voted Tuesday to purchase Providence Hospital for $85 million.
The acquisition solidifies the university as Mobile’s largest health care provider, adding to University Hospital and Children’s and Women’s Hospital.Ascension Health, which owns Providence and Sacred Health Hospital in Pensacola, has experienced financial problems. It ended fiscal year 2022 with an $879.1 million operating loss and a net loss of more than $1.8 billion.
University officials said Ascension Health approached the school in April 2022 about the possibility of selling the facility. They said buying the hospital will address a number of needs, including capacity challenges and an opportunity to expand expanding teaching and Owen Bailey, the chief executive officer of senior associate vice president for medical affairs and South, said his team spent five months closely scrutinizing the offer.The university is working with two banks, Hancock Whitney and J.P Morgan, on the financing. That will break down as follows:
The university will take out a short-term, $100 million “bridge loan” to cover the $85 million cost plus up to $15 million to cover expenses on a short-term basis. The school then will have a revolving line of credit up to $50 million to pay the operating expenses for up to three years. Finally, the university will borrow $100 million from bonds to pay off the bridge loan in six to 12 months.
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