Deal Finished to Form O.C.-Based West Med

A Tennessee health management company completed its acquisition of Santa Ana-based United Western Medical Centers on Monday, clearing the way for the creation of Orange County’s largest independent health care foundation, with assets topping $40 million.

Officials of Nashville-based OrNda HealthCorp and nonprofit United announced plans for the buyout last July. Although final terms were not disclosed, officials said Monday that more than $40 million in net proceeds from the sale will form the endowment of the new West Med Health Foundation, to be headquartered in Orange County.

California law requires any organization that switches from not-for-profit to for-profit status to compensate the public for the benefits it derived from operating as a tax-exempt entity. Thus, the state required the amount OrNda paid for United Western--in excess of the nonprofit’s liabilities--to be placed in a charitable foundation.

Marven Howard, former chairman of United, will serve as the interim chairman of the new foundation. He said the foundation will fund a variety of health care and medical programs to assist the working poor, elderly and other needy citizens in central Orange County.

“We did some good things for the community in running the hospitals . . . and we’re looking forward to doing more good through the foundation,” Howard said.

He said it could be at least eight months before the foundation is operational and actively funding programs in the community. During that time, the fledgling group must choose an interim board of directors and come up with a charitable mission that will be acceptable to the California Attorney General’s Office, which is overseeing the proceedings.

Howard said specific charitable programs will have to be determined by the board. But he said the scope of the foundation’s activities could include things like community wellness screenings, health education and funding to help subsidize medical care for needy Orange County residents.

United owned the 288-bed Western Medical Center-Santa Ana, a 193-bed sister hospital in Anaheim and a skilled nursing facility in Santa Ana.

United’s decision to sell those facilities to OrNda underscores the difficulty small players are having competing with giant health care organizations in an era of rapid consolidation. OrNda has said it was not considering closing any of United’s facilities.

Indeed, just a few months after the transaction was announced, OrNda announced that it would in turn be acquired by Santa Barbara-based Tenet Healthcare Corp. in a deal worth $3.2 billion.

That deal is expected to close next year pending approval by state and federal regulators.