Hospice of Charleston acquired by Gentiva

Facing mounting financial and competitive pressures, one of the region's oldest and best-known hospice-care providers has been sold to a large company with operations in nearly every state.

Gentiva Health Services Inc. of Melville, N.Y., said this week that it acquired the nonprofit Hospice of Charleston for undisclosed financial terms.

Hospice of Charleston is creating a foundation to retain ownership of its 20-bed Mount Pleasant facility, which Gentiva will operate under a lease agreement. The rental income from that deal will be used by the local organization to pay the mortgage debt on the Wando Park Boulevard building and to fund a new nonprofit foundation that would support charitable hospice care in the Charleston area.

Officials at Hospice of Charleston declined to comment or could not be reached Tuesday.

Hospice services provide care to people in their final months of life, either in home-based care or at an inpatient facility. The focus is to provide comfort to the terminally ill when it has been determined that all medical resources have been exhausted.

In a document provided to The Post and Courier spelling out the reasons for the sale, Hospice of Charleston said the group essentially was forced to seek out a buyer or a partner.

The biggest financial drain was its two-year-old hospice house off Long Point Road, which cost more than anticipated and was not completed on time, throwing off financial projections.

The original construction budget was $3.8 million.

Increased competition was another factor that came into play. Hospice of Charleston estimates that the number of similar facilities in the region has doubled in recent years to more than 20.

Also, the group cited regulatory changes that have adversely affected reimbursement payments from the federal government.

"In brief, we found ourselves struggling financially, and realized we could not continue to offer the same level of service that had distinguished us for 27 years," according to the document.

The group said its "clear preference" was to form a partnership with another nonprofit organization in an effort that began earlier this year. As its financial situation worsened, Hospice of Charleston was pressured to make a timely decision. Gentiva presented the most attractive offer.

The transition to the New York-based company is expected to be relatively seamless for patients. All qualified employees will be offered jobs with Gentiva, and volunteers will continue to provide services under the foundation.

Hospice of Charleston was incorporated in March 1980 and served its first patient in 1981, according to its Web site.

Gentiva issued a statement about the acquisition late Monday.

"This transaction strengthens Gentiva's presence in South Carolina and gives us the opportunity to bring our clinical excellence and innovation to residents of these three counties," said Tony Strange, president and chief operating officer. "It also continues Gentiva's focus on acquisitions that add to our geographic reach ... and gives us additional platforms for the expansion of our services, including our pioneering specialty programs."

Gentiva originally was a home health care subsidiary of Olsten Corp., best-known for its staffing services. It was spun off to stockholders in 2000.

Since that time, its stock price has climbed from $1.57 a share to an all-time high of $25.76 as of Tuesday's close. In just the past month, the price has climbed about 38 percent, helped by strong second-quarter results and an increase in the company's forecast for 2008 earnings.

Home health care remains Gentiva's main business, accounting for about two-thirds of its revenue in 2007. Health care benefits management services provided a bit less than a fourth of last year's revenue, while other services, including hospice care, accounted for the remaining 10 percent.

Revenue has increased in each of the past four years and totaled $1.2 billion in 2007, when it posted a profit of $32.8 million, up from $20.8 million in 2006.

Michael Buettner contributed to this report. Reach John McDermott at 937-5572 or jmcdermott@postandcourier.com.