PE Firm Buys Psychiatric Hospital Owner Springstone

Private equity firm Welsh, Carson, Anderson & Stowe has acquired a majority stake in hospital administrator Springstone, and invested $100 million into company. Financial terms of the acquisition were not released. Springstone owns and operates a psychiatric hospital in Indiana, and plans to acquire additional psychiatric and behavioral facilities across the U.S. Welsh, Carson, Anderson & Stowe is based in New York and invests mainly in healthcare and information and business services.


Springstone, Inc. (the “Company”) announced today that Welsh, Carson, Anderson & Stowe (“Welsh Carson”), one of the largest private equity investors in information/business services and healthcare, has acquired a majority share in the Company and committed a total of $100 million in equity capital for the development of behavioral healthcare and psychiatric hospitals.

Springstone will be led by healthcare veteran W. Earl Reed, III, who serves as President and Chief Executive Officer for the Company, and behavioral health entrepreneur Ken Newman, an investor in Springstone who will become Chairman of the Board.

Reed has worked in the healthcare industry since 1973 and has served as CEO and CFO of several private and public healthcare services companies including LifeCare Management Services, Rehab Designs of America, Vencor Inc. (now Kindred, Inc.), and Humana. Newman is founder of Horizon Health Corporation, a leading provider of psychiatric hospitals and mental health services from 1981 until 2007 when it was sold to Psychiatric Solutions.

“We are very pleased to add Springstone to our growing healthcare portfolio and are optimistic about the outlook for behavioral healthcare and psychiatric hospitals. Under the leadership of Ken Newman and Earl Reed, we have a tremendous combination of industry expertise and a proven track record of successfully growing and building companies,” said Paul B. Queally, Co-President of Welsh Carson. “Welsh Carson has more than 30 years of experience investing in the healthcare industry, including a highly successful investment in Behavioral Health Corporation, which was later sold to Psychiatric Solutions. We look forward to partnering with the Springstone team as we aggressively pursue both organic and external growth opportunities for the Company.”

“We are very excited about the commitment that Welsh Carson has made to Springstone, which will allow the Company to significantly accelerate the pace of our hospital development,” said Reed. “The Welsh Carson team has a deep understanding of the industry and shares management’s view of the significant growth opportunities available to us.”

The Springstone senior leadership team brings extensive behavioral health and hospital system administration to the Company:

— Patrick Hammer, Springstone Chief Operating Officer, has a 20-year
history in the mental health field. He held positions with United
Medical Corporation, Charter Behavioral Health System and National
Medical Enterprises before founding Wellstone Regional Behavioral
Healthcare, a 100-bed behavioral hospital in Jeffersonville, IN.
Wellstone was sold to Psychiatric Solutions in 2008.

— Dean Saling, Springstone Vice President for Operations, brings more than
30 years’ experience in the mental health field to the Company. A
seasoned administrator with a master’s degree in social work, Saling
founded Atlantis Healthcare and has held a variety of clinical and
administrative positions with companies including United Medical and
Charter Behavioral Healthcare.

— Jill Force, Springstone Chief Administrative Officer, is also a CPA and
attorney. She has an extensive track record running the legal, financial
and administrative aspects of healthcare companies. She served as
Executive Vice President, Chief Administrative Officer and General
Counsel for LifeCare Management Services, and has held executive
positions with Rehab Designs of America and Vencor, Inc.
About Welsh, Carson, Anderson & Stowe

Welsh, Carson, Anderson & Stowe (“WCAS”) was formed in 1979 and has focused its investment activities in two industries, information/business services and healthcare. WCAS manages $20 billion in capital and has a current portfolio of over thirty companies. WCAS’s strategy is to buy growth businesses, partner with outstanding management teams and build value for its investors through a combination of operational improvements, internal initiatives and strategic acquisitions. See to learn more.

About Springstone, Inc.

Springstone, Inc. owns and operates a psychiatric hospital located in Newburgh, Indiana, and plans to develop and acquire additional psychiatric hospitals throughout the United States. The Newburgh hospital also provides partial hospitalization and intensive outpatient psychiatric and substance abuse treatment to adult and geriatric patients.

Media: | Springstone | Jill L. Force, 502-587-1007 | Chief Administrative | Officer | | or | Welsh, Carson, Anderson & Stowe | Jonathan | Rather, 212-893-9570 | General Partner and CFO | | SOURCE: Welsh, Carson, Anderson & Stowe