ilton Head Medical Center is a 64-bed acute care/15-bed sub-acute care hospital that converted from its not-for-profit community status to for-profit in May of 1995. The facility was sold for $26 million gross to several purchasers, including Tenet Healthcare (70%), the Hilton Head Foundation (20%) and the physician/faculty practice of the Medical University of South Carolina (10%). Roughly $21 million of proceeds from the sale was placed into the existing Hilton Head Foundation. In May 1997, Tenet purchased the Hilton Head Foundation's 20 % stake for $6.7 million; this money was subsequently placed into the Hilton Head Foundation.

Conversion Process

Motivation. The primary goal of the conversion was to maintain a working hospital in the community. There was consensus in our case study interviews that it was particularly important for a viable hospital to remain on Hilton Head Island. Most persons we spoke with believed that a stand-alone not-for-profit could not survive and flourish in this area in the long term. Projections for the future of the hospital were not favorable, and selling the hospital was seen as the strategy most likely to result in a vibrant hospital on Hilton Head Island.

Public Oversight. The proposed sale generated a fair amount of interest on Hilton Head. The general public was interested in the conversion because of the history of the hospital's operation as a community not-for-profit organization. The Hilton Head Foundation purchased a 20% equity stake in the hospital in May of 1995, primarily as a means of keeping some level of community involvement in the facility.

The Attorney General had little involvement in the sale. None of the persons we spoke with knew of the Attorney General's office having any role in this conversion.

Fair Value. Assets of the hospital appear to have been sold at a fair price. The hospital board received multiple bids for the hospital and was in a position to choose among several attractive offers. A consulting firm was hired to help solicit and evaluate bids.

Community Control

The community has permanently lost ownership of the hospital since the Hilton Head Foundation sold its equity stake in May 1997. There does not appear to be widespread community concern about the loss of control in the hospital, particularly given the apparent satisfaction with the operation of the hospital since the original sale.

Community Health Impact

Hospital Survival. The primary motivation of the board in selling the hospital was to enhance the likelihood of a vibrant hospital remaining in the Hilton Head community. The old board chose to sell the hospital to a large chain, Tenet, based on the belief that a larger chain would be more stable than smaller investor-owned hospital companies. The board wanted to avoid resale of the hospital. The belief that a nonprofit hospital could not survive in this hospital market was shared widely by the hospital board that chose to sell the facility.

Access. There is conflicting evidence regarding whether the conversion resulted in increased barriers for uninsured and minority residents. There are divergent accounts of access problems for black and uninsured persons living on Hilton Head; while the hospital administration insists there are no implicit nor explicit barriers, several community leaders disagreed. Others identified access barriers as a long-standing problem, and not one created or exacerbated by the conversion. A volunteer initiative called Volunteers in Medicine provides primary care services to any person on Hilton Head Island, and is an important source of primary care; the development of this organization was not related to the conversion. This organization has received