By JULIE MINDA
March brought news of several new or advancing affiliations involving Catholic health systems and facilities. Much of the activity involves St. Louis-based Ascension Health Alliance; its for-profit subsidiary Ascension Health Care Network; and Englewood, Colo.-based Catholic Health Initiatives, but Novi, Mich.-based Trinity Health completed an acquisition, and San Francisco-based Dignity Health announced the sale of a hospital.
Top announcements included news that:
Ascension Health Alliance plans to acquire the six-hospital Daughters of Charity Health System of Los Altos Hills, Calif.
CHI's four-hospital Saint Clare's Health System of Denville, N.J., wants Ascension Health Care Network to be its parent company. The network is in negotiations to acquire two other Catholic health care providers in New Jersey, St. Joseph's Healthcare System of Paterson, N.J., and St. Mary's Hospital of Passaic, N.J.
Ascension Health's three-hospital Sacred Heart Health System in Pensacola, Fla., has formed a joint venture with LHP Hospital Group of Plano, Texas, and that joint venture leases and operates Bay Medical of Panama City, Fla. Bay Medical includes a hospital and a network of health care facilities.
CHI accepted a recommendation of the board of St. Joseph Medical Center that the Towson, Md., facility be transferred to the 12-hospital University of Maryland Medical System.
Trinity Health acquired Chicago's Mercy Hospital and Medical Center, a 479-bed teaching facility with a network of care sites.
Dignity Health signed an agreement to sell Saint Mary's Regional Medical Center of Reno, Nev., to Prime Healthcare Services of Ontario, Calif.
Ascension Health Alliance and Daughters of Charity
Ascension Health Alliance is performing due diligence on the Daughters of Charity system, and the parties expect to reach a definitive agreement by the end of the year. If the deal is completed, the Daughters of Charity system will join the nonprofit hospital network, Ascension Health, which — like Ascension Health Care Network — is a subsidiary of Ascension Health Alliance.Regardless of how the Supreme Court rules on the Patient Protection and Affordable Care Act, Ascension Health Alliance's head Anthony Tersigni said in an interview in late March, that the health care system in the U.S. will continue to reform and become more value and prevention oriented, and providers need to be prepared for that, including through mergers like the one planned between Ascension Health Alliance and the Daughters of Charity system. Tersigni is president and chief executive of Ascension Health Alliance.
Robert Issai, president and chief executive of the Daughters of Charity system, said that joining Ascension Health Alliance will help his system to better adapt to the rapidly evolving health care finance and delivery system. He added that it is particularly difficult for California hospitals to operate in today's health care landscape and economy — there is high unemployment, extremely low Medicaid reimbursements and high levels of uninsurance in that state. Becoming part of Ascension Health Alliance will help the Daughters of Charity system to handle such pressures, he said.
Tersigni and Issai noted that the systems have shared values and a shared commitment to the ministry — both systems had foundresses from the Daughters of Charity congregation. Both executives said it is premature to discuss the particulars of the deal, such as the specific negotiations timeline and acquisition price.
Ascension Health Care Network and Saint Clare's
With the Saint Clare's-Ascension Health Care Network talks under way, Ascension Heath Care Network now is in negotiations with three Catholic providers in New Jersey that represent a total of seven hospitals and a nursing home.
Before it chose Ascension Health Care Network as a buyer, Saint Clare's spent a year evaluating different partnership options intended to help its facilities to navigate competitive changes and financial pressures and to better meet the needs of the four communities and their environs served by Saint Clare's hospitals: Boonton Township, Denville, Dover and Sussex Borough.
Ascension Health Care Network and Saint Clare's are in exclusive negotiations on the acquisition; they expect to reach a definitive agreement by June 30 and close the deal by the end of the year.
Formed about a year ago, Ascension Health Care Network's strategy is to acquire equity-starved nonprofit Catholic hospitals and health systems and convert them to for-profit providers while preserving their Catholic identity. Ascension Health Alliance has a 20 percent stake in Ascension Health Care Network, and its partner equity firm, Oak Hill Capital Partners, 80 percent. Ascension Health Alliance has sole authority over matters regarding the Catholic identity of hospitals acquired by the network.
Ascension Health Care Network has yet to acquire any facilities, but it has confirmed that in addition to Saint Clare's, it is negotiating with St. Joseph's — which includes two hospitals and a nursing home — and St. Mary's, which is a stand-alone medical center.
The Sisters of Charity of St. Elizabeth had been looking at different partnership opportunities for St. Joseph's and approached Ascension Health Care Network. At this point, St. Joseph's and Ascension Health Care Network have a memorandum of understanding and are in exclusive negotiations.
Sacred Heart, LHP and Bay Medical
The Sacred Heart-LHP joint venture went into effect April 2. The joint venture organization formed by nonprofit Sacred Heart and the for-profit LHP — called Bay County Health System — has agreed to lease and operate Bay Medical for 40 years.
Under the deal, which has been approved by the Bay County, Fla., Commission, the for-profit joint venture organization will provide $154 million to Bay Medical for the lease and to fulfill an asset purchase agreement. Sacred Heart's investment in this payment is about $31 million.
Bay Medical will abide by the Ethical and Religious Directives for Catholic Health Care Services. With the transition, Bay Medical employees became staff of LHP.
Bay Medical had been struggling financially due to increases in the number of uninsured patients it was treating and declining reimbursement from government payers. Bay Medical had been operating as a public, nonprofit, safety net hospital, but it did not receive direct financial support from local taxing bodies. Bay Medical had accumulated debts totaling about $115 million.
The lease agreement with the joint venture enables Bay Medical to pay off its debt while also benefitting from the economies of scale that will result from partnering with Sacred Heart. According to Sacred Heart leaders, the deal enables them to extend their mission of serving the people of northwest Florida to new areas of that region.
St. Joseph of Towson and the University of Maryland systemSt. Joseph's exclusive negotiations with the University of Maryland system also come after a year of that medical center's leadership evaluating potential new owners — newspapers had reported that Ascension Health was among the suitors. The parties have not announced their target timing for completing the deal.
According to St. Joseph leaders, that medical center's board is pursuing the change in ownership based on a belief that in the near future it will be critical for the hospital to be part of a regional network that includes hospitals, physicians, payers and other health care facilities that are geographically proximate to one another and can provide a continuum of coordinated care. CHI has no other hospitals in Maryland.
The university health system has said it will "honor" St. Joseph's Catholic identity. As Catholic Health World went to press, the system and medical center had not yet determined whether or how that identity would be maintained.
Trinity Health and Mercy
Mercy joined Trinity Health April 1, becoming Trinity Health's third Chicago-area hospital. Trinity Health now has 48 hospitals in its 10-state network.
Mercy had been a stand-alone facility. Joining a large system provides resources and economies of scale needed to bolster facilities and enable them to carry on their mission, said Sr. Sheila Lyne, RSM, president and chief executive of Mercy.
In early March Trinity Health announced that its Michigan subsidiary had signed an affiliation agreement with the University of Michigan Health System.
Dignity's Saint Mary's and Prime Healthcare
Saint Mary's, its parent company and its sponsors had been searching for a buyer for nearly two years in the hope of avoiding closure. The 380-bed facility has sustained financial losses, and it lacks the resources to invest in needed improvements. Administrators said that by joining Prime, the facility will be able to avoid closure.
Prime plans to invest $20 million in Saint Mary's over the next three years. It also has agreed to maintain the hospital's current acute care and emergency care services, retain virtually all of the hospital's employees and maintain the hospital's current charity care policies.
After the sale, the facility will transition from nonprofit to for-profit status; and it no longer will be Catholic. (Prime already has 13 for-profit facilities.)
Saint Mary's sponsors, the Dominican Sisters of San Rafael, have approved the hospital's sale. The deal is expected to close by June 30.