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IT Business

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 in them.

Additional information about Medical Facilities Corp. can be found at, in the companies section.