NASHVILLE, Tenn. -- Hospital Corporation of America announced Monday plans to acquire Hospital Affiliates International Inc., a subsidiary of INA Corp., in a $650 million transaction that will make HCA the world's largest hospital management company.
Donald S. MacNaughton, chairman of HCA, and Ralph S. Saul, chairman of INA Corp., announced an agreement in principle to merge Hospital Affiliates into an HCA subsidiary.
When the transaction is complete, the giant HCA hospital management conglomerate will have 351 hospitals containing 49,500 beds.
INA will receive $425 million in cash and a number of shares of HCA common stock with a value of $225 million. The number of shares will range from 5,390,000 to 6,660,000.
An INA spokesman said the company agreed to spin off its hospital care operations because the large amounts of cash required for its expansion would compete with the capital requirements of its insurance business.
'The merger will permit us to concentrate on our basic insurance and financial service business, which in 1980 generated more than 90 percent of the company's net income,' Saul said.
Nashville became the nerve center of the world's private health care industry in 1968 with the founding of HCA, Hospital Affiliates, and General Care Corp. HCA bought General Care last year for $78.1 million.
HCA has 197 hospitals with 29,900 beds. HAI has 154 hospitals with 19,600 beds and 19 nursing homes with 2,400 beds.
The advent of Medicare prompted the founding of the three companies during a period when business was good, the stock market was active, and public investment money was readily available.