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MailTribune.com
  • Pinnacle Healthcare purchases Hearthstone

    The Medford health care firm joins a company with 11 nursing centers throughout Oregon
  • A Springfield-based company that owns two skilled nursing centers in Grants Pass has acquired the Hearthstone nursing center in Medford.
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  • A Springfield-based company that owns two skilled nursing centers in Grants Pass has acquired the Hearthstone nursing center in Medford.
    Pinnacle Healthcare, which owns Royale Gardens and Highland House in Grants Pass, took possession of Hearthstone on Jan. 1. The sale was announced Thursday by Asante Health System, Hearthstone's former owner. Asante is the parent company for Rogue Valley Medical Center and Three Rivers Community Hospital in Grants Pass.
    Julie Carlson, Pinnacle president, said the company will keep the Hearthstone name and retain all of the current employees, who number about 110.
    "Our intention is to continue the excellent program Hearthstone and Asante started," Carlson said.
    With the acquisition of Hearthstone, Pinnacle now has 11 nursing centers in Oregon. Besides its two Grants Pass sites, the privately held company also has sites in Corvallis, Lincoln City and Woodburn, two in Roseburg and three in Eugene. It also operates two care centers in Arizona.
    Carlson said Pinnacle will have about 1,350 beds in Oregon sites with the addition of Hearthstone, which is licensed for up to 151 beds.
    Pinnacle expressed interest in Hearthstone when Asante announced its intent to sell the center last year, said Scott Kelly, Asante's vice president for strategic planning and communications. Kelly said Asante's good working relationship with Pinnacle in Grants Pass made them an attractive buyer.
    "Overall, we're delighted to have Pinnacle as a partner," Kelly said.
    He said a good working relationship between nursing centers and hospitals is important because hospitals often send patients to nursing centers when they no longer need hospital care, but they're still too ill to return home.
    He and Carlson both declined to discuss financial details of the sale.
    Kelly said Asante has a lease on the Hearthstone building at 2901 E. Barnett Road that runs through 2013, and Pinnacle will sublease from Asante. The lease includes an additional five-year option, Kelly said.
    Asante announced plans to sell Hearthstone in February 2009. Kelly said closing the deal was more challenging than he might have expected because uncertainty in financial markets made it difficult for potential buyers to obtain financing.
    The sale is part of a major restructuring that included closure of Asante's Genesis drug and alcohol treatment center, sale of its home health units, and elimination of 94 jobs. When the restructuring was announced, Roy Vinyard, Asante's chief executive, said the company would focus on its hospital-based patient care.
    Vinyard said at that time that admissions had declined at both hospitals, while charity care and bad debt were continuing to rise. The hospital also spent an unanticipated $4.5 million in interest expense in the 2008 budget year on its construction bonds because of unexpected volatility in financial markets associated with the recession. For the budget year that ended Sept. 30, 2009, however, unanticipated interest declined to $758,000.
    Asante plans to issue new bonds to get out from under high interest payments on its existing bonds. Hospital officials said in December that retiring the bonds and the "interest swap" provisions they included would cost about $30 million over and above the cost of redeeming the bonds at face value.
    On the Web: pinnacle-healthcare.com/
    Reach reporter Bill Kettler at 541-776-4492 or e-mail bkettler@mailtribune.com.
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