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M&A Roundup: Prime, Tenet, BIDMC Announce Deals

 |  By John Commins  
   February 04, 2013

Prime Healthcare Services to Buy Hospitals in NJ, KS
Ontario, CA-based Prime Healthcare Services has announced two separate acquisitions of financially troubled hospitals in New Jersey and Kansas. Financial terms of the deals were not disclosed.

In Kansas, Prime has agreed to buy Providence Medical Center in Kansas City, and Saint John Hospital in Leavenworth, from SCL Health System, a faith-based, nonprofit system. Under the terms of the deal, Prime will make "significant investments" to financially stabilize the hospitals and allow them to maintain current levels of charity care.

The hospitals will maintain their current acute care and emergency department services for at least five years, invest $10 million toward capital improvements, and employment offers will be extended to "substantially all employees."

The deal calls for Prime to hire all current St. Mary's Hospital employees. Prime will invest $30 million in capital improvements over the next five years beyond routine replacements and additions. Prime will maintain a local governing board.  The APA also calls for Prime to assume the existing Collective Bargaining Agreement with JNESO which represents nurses and clinical employees.

"From the financial support to the terms of the APA, it is clear that Prime offers the best way forward for St. Mary's," Edward J. Condit, St. Mary's president/CEO, said in prepared remarks. "Prime has given St. Mary's an excellent opportunity to not only be viable, but to grow and prosper. We must proceed as quickly as possible to finalize this sale in order to protect and secure the healthcare needs of the Passaic community."

"We are appreciative of the wonderful legacy the Sisters of Charity of Leavenworth leave these hospitals and our communities," Michael Parra, MD, a board member for Providence Medical Center and Saint John Hospital, said in prepared remarks. "Yet, now is the time to embrace a new direction and Prime Healthcare Services has a strong reputation for quality, excellence and growth."

In New Jersey, Prime said it will keep the St. Mary's Hospital in Passaic open as an acute care hospital for at least five years and it will continue to operate the hospital in a manner that is consistent with its ethical and religious directives. That includes adopting charity care policies which are at least as generous as those currently used by the hospital.

Tenet's San Ramon RMC in Joint Venture with John Muir Health
Dallas-based Tenet Healthcare Corporation and Walnut Creek, CA-based John Muir Health have announced the creation of a joint venture partnership between San Ramon Regional Medical Center, a 123-bed acute care hospital in San Ramon, CA and John Muir Health. John Muir Health is an integrated system of doctors, hospitals and other healthcare services in the San Francisco Bay area.

Under the deal, John Muir Health will spend $100 million to acquire a 49% ownership interest in San Ramon RMC. The two organizations will expand and improve the efficiency and coordination of care in the TriValley area and nearby communities, including San Ramon.

The transaction is expected to close by March 31. John Muir Health and Tenet will also jointly develop outpatient services, such as Ambulatory Care Centers and other projects to be determined, in the Tri-Valley area and nearby communities, including San Ramon. John Muir Health's existing hospitals, facilities and other assets are not included in the partnership agreement. 

"In the midst of healthcare reform and a very competitive local environment, we will offer better, more accessible and integrated care together than we can apart. Together, we will pursue new and innovative ways to improve patient care, access to services and affordability," Cal Knight, president/CEO of John Muir Health, said in prepared remarks.

MA's Jordon Health Systems to Join Beth Israel Deaconess
Plymouth, MA-based Jordan Health Systems, Inc. has signed a letter of intent to become part of Boston-based Beth Israel Deaconess Medical Center. The two systems are expected to finalize the deal later this year, under which Jordan Health Systems would become part of Beth Israel Deaconess Medical Center, but retain local management and board governance.

"For more than 100 years, Jordan Hospital has been a vital part of the communities we serve," Jordan Board of Trustees Chair Clark Hinkley, said in prepared remarks.

"This decision was not just about finances. It was about finding a healthcare affiliation that gives us the scale we need to compete in an ever-changing environment and ensure that local care will stay just that...local. By joining BIDMC, we will gain long-term financial stability without sacrificing who we are and what we believe in."

The affiliation will align with the resources of Harvard Medical Faculty Physicians at BIDMC. Also, under terms of the agreement, JHSI would continue to maintain its not-for-profit status.

John Commins is a content specialist and online news editor for HealthLeaders, a Simplify Compliance brand.

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