U.S. hospitals raises $221 million on TSX
TORONTO – The physician owners of three surgical
hospitals in South Dakota have raised Cdn$221 million by selling 51
percent ownership in their facilities on the Toronto Stock Exchange.
Their Toronto-based company, called Medical Facilities Corp., is listed
as “DR.UN” on the TSX, and raised the cash in late March by selling
shares called “income participating securities”. They consist of a
mixture of stock and debt.
The offering was conducted through a syndicate led by BMO Nesbitt Burns
Inc. and TD Securities Inc., and the buyers were mainly Canadian
financial institutions and other large investors, according to a news
article in the Rapid City Journal.
The three hospitals are specialty facilities that conduct certain
scheduled surgeries, as opposed to emergency procedures, including ear,
nose and throat operations, neurosurgery, and orthopedic procedures.
The hospitals consist of: the Black Hills Surgery Centre of Rapid City,
S.D., the Sioux Falls Surgical Center and the Dakota Plains Surgical
Center in Aberdeen. The hospitals are located in the most highly
populated areas of South Dakota.
Together, the centres have 21 operating rooms, 44 recovery beds, 439
physicians with staff privileges and 450 employees. MFC’s prospectus
notes the hospitals are growing quickly, with combined revenue
increasing to US$85 million in 2003 from US$34 million in 1999.
The funds were raised largely as a way for the hospitals to continue
their expansion, the company said. Proceeds are to be divided among the
three surgery centres, with US$70.9 million to Black Hills, US$11.6
million to Dakota Plains and US$66 million for Sioux Falls.
According to the company, the funds will allow for the opening of
additional operating rooms and acquisition of equipment. The group may
also acquire other surgical facilities or healthcare groups.
Dr. Donald Schellpfeffer, a Sioux Falls physician is chief executive
officer of Toronto-based MFC. Dr. Larry Teuber, a Rapid City surgeon, is
chief medical officer of the new company.
The company states in its prospectus that outpatient hospitals (where
procedures are conducted in 24 hours or less) and specialty hospitals
that keep patients for longer stays but conduct a limited number of
procedures, are proliferated rapidly in recent years.
As of February 2003, there were approximately 100 specialty hospitals
and 3,500 ambulatory surgical centres operating in the United States, an
increase of more than 50 percent since 1996.
The General Accounting Office, the U.S. Congress’s non-partisan
investigative body, estimates that approximately 70 percent of these
facilities are owned, at least in part, by the physicians who practice
Additional information about Medical Facilities Corp. can be found at
www.sedar.com, in the companies