Cedar Springs changes hands/ Psychiatric hospital bought by Tennessee

0 Comments | Gazette, The (Colorado Springs), Mar 13, 2003 | by WAYNE HEILMAN

A Tennessee company plans to buy Cedar Springs Behavioral Health System in Colorado Springs and five other psychiatric centers by March 31.

Psychiatric Solutions Inc. agreed last month to pay $63 million to Nashville, Tenn.-based Brown Schools Inc. for the six centers, which will more than double the size of the company. The six centers last year generated combined revenue of $76 million.

Cedar Springs provides psychiatric and mental health services to children and adults in a 110-bed hospital south of downtown. It employs nearly 200 people.

Brent Turner, a spokesman at Psychiatric Solutions' Franklin, Tenn., headquarters, said the company plans no cuts in staffing or programs.

"We hope to expand and are looking for ways to enhance and improve services at these facilities," Turner said. "We are not coming in to make cuts."

The company's strategy, according to its Web site, is to acquire four to six hospitals a year with 50 to 75 beds.

The company is looking for growing urban markets in which it can make money through new programs, marketing and recruiting additional psychiatrists.

"We are confident this growth opportunity exists at all six of the facilities . . . and that each facility is positioned to contribute to PSI's goal of being the dominant provider in each of its markets," Psychiatric Solutions President Joey Jacobs said.

The other hospitals Psychiatric Solutions is acquiring are in Charlottesville, Va.; Tulsa, Okla.; and Austin, San Antonio and San Marcos, Texas.

Psychiatric Solutions was started in 1996. It operates five psychiatric hospitals in Illinois, North Carolina and Texas and manages hospital psychiat- ric units in 14 states. The company earned $2.82 million on revenue of $78.1 million during the first nine months of 2002.

Brown Schools is selling the hospitals as part of its plans to leave the behavioralhealth-care business and focus on education of troubled youths. The company operates private boarding schools, public schools and programs with juvenile justice systems in five states.

Dr. Emory Brady founded Colorado Springs Psychopathic Hospital in 1923 at 2135 Southgate Road. Healthcare International Inc., which later became Brown Schools, acquired the hospital in 1984.

CONTACT THE WRITER: 636-0234 or wayneh@gazette.com