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Texas, Illinois Facilities : Westworld Purchases 2 More Hospitals

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Times Staff Writer

Continuing its course of rapid expansion, Westworld Community Healthcare Inc. has acquired two more hospitals, building its network of rural medical care facilities to 28 in 12 states.

Officials of the 2 1/2-year-old Lake Forest company said Monday that agreements were signed last Friday to immediately take over operation of an 18-bed hospital in Mason, Tex., and a 30-bed hospital in Paxton, Ill.

As is typical of other Westworld arrangements, the company paid no money for the right to operate the community-owned facilities, according to Michael D. Dunn, Westworld’s chairman and chief executive. Dunn said both hospitals had been losing money.

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In exchange for the no-cost takeovers, Dun said, Westworld committed itself to run the facilities at its own risk under 40-year leases. He said the company will lease the Mason hospital at a nominal rate of $1 a year but will pay annual rent of $96,000 for 26 years to retire a construction debt on the hospital in Paxton.

In addition, Dunn said Westworld intends to pump about $1 million into new equipment and capital improvements at the acquired hospitals. The funds for upgrading the facilities, he said, will come from a $30-million bond sale that the company completed last week.

With a corporate strategy that calls for the operation of 52 hospitals, Westworld’s expansion is far from over. “Our intention is to acquire eight or nine facilities a year,” Dunn said.

In its acquisitions, Westworld targets health care facilities in remote parts of the country that have become “financial turkeys,” Dunn said. Usually, he explained, the hospitals have lost the confidence of local residents, who will frequently travel many miles to obtain treatment in other towns.

By bringing in its own staff and modern equipment, Dunn said, Westworld usually can increase a hospital’s patient load and turn its finances around in less than six months.

Westworld’s revenue and earnings have burgeoned in relation to the company’s growth. Westworld earned $1.8 million on $50 million in revenue in 1984, compared to earnings of $279,000 on revenue of $17 million the previous year.

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