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Scranton Scramble: CHS to Acquire Moses Taylor, Geisinger to Buy CMC

 |  By John Commins  
   July 20, 2011

In the span of an hour or so on Tuesday, Scranton, PA's hospital alignment underwent a seismic shift.

First, Community Health Systems, Inc. -- which acquired Scranton's Regional Hospital in April -- announced Tuesday morning that it will buy the nearby nonprofit Moses Taylor Health Care System. About one hour later, Geisinger Health System confirmed local media reports that it was acquiring the Community Medical Center, located near the CHS hospitals in Scranton.

CHS acquires Moses Taylor Health Care System
"We are celebrating today. It's a great day for our community. The community is going to benefit. Our patients are going to benefit, and it's a tremendous stimulus in a market that has been long-identified as having to change," Moses Taylor CEO Karen Murphy, RN told HealthLeaders Media in an interview.

Murphy said the purchase price of the CHS acquisition would not immediately be made public because due diligence is still underway and the deal is not expected to be completed until 2012.  

She said, however, that for-profit CHS will invest $60 million over five years in facility and technology upgrades for the health system, in addition to the $60 million the Franklin, TN-based for-profit hospital chain has committed for Regional Hospital.

"Our market is we have three acute-care hospitals within three city blocks. Our market just couldn't sustain the same business model," Murphy says. "We began a year ago to investigation possibilities. We were looking for a partner that would be able to provide capital and improve the quality and cost of healthcare of our community. With the collaboration between Scranton Regional and Moses Taylor, we are going to look at how we can increase quality and efficiency."

The health system includes the flagship 217-bed Moses Taylor Hospital in Scranton, the 25-bed Mid-Valley Hospital in Peckville, PA, and Physicians Health Alliance Inc. If the deal passes regulatory review, Moses Taylor will join the 13 hospitals in central and eastern Pennsylvania that are now affiliated with Franklin, TN-based CHS.   

"The acquisition of Moses Taylor Health Care System will provide a compelling opportunity to expand our operations in northeast Pennsylvania, CHS Chairman/President/CEO Wayne T. Smith said in a media release.

"We look forward to working with the system's outstanding physicians and employees, who are part of a century-long tradition of providing high-quality, compassionate care for patients. We also look forward to new opportunities for collaboration, sharing of best practices, resources and expertise as we continue to expand and enhance the health services available in this region."

Moses Taylor and Regional will each continue to offer healthcare services on their respective campuses while the two hospitals work collaboratively to plan how they will deliver clinical services for the future. "Our agreement provides for a long-recognized community need — a consolidated healthcare delivery system," Murphy said.

The proceeds of the sale will be used to fund employee pension plans, retire the health system's liabilities and debt, and establish a nonprofit foundation to improve the health and well-being of the community.  

The agreement assures:
  • Active employees will be hired into their same positions, at the same rate of pay and with their seniority recognized for a minimum of one year post-closing.
  • The health system providers will continue to provide charity care and participate in the Medicare and Medicaid programs.
  • A local board of trustees will be established in each of the organizations.
  • Moses Taylor will continue to participate in its residency and fellowship programs and will continue to support The Commonwealth Medical College.

CHS is one of the largest publicly-traded hospital companies in the nation and specializes in operating 133 acute care hospitals in non-urban and mid-size markets throughout 29 states. The announcement marks the completion of a 12-month exploration process.

Geisinger and Community Medical Center sign definitive agreement

Also Tuesday morning, not-for-profit Community Medical Center announced that it will merge and integrate into not-for-profit Geisinger.

"This has been a conscientious and deliberate decision, and we explored a number of options before our board unanimously voted to approve merger and integration into Geisinger," Robert P. Steigmeyer, CEO/president of CMC, said in a media release. "It was important for CMC to choose a quality-focused health system with proven success that mirrors our own charitable mission, values and standards of care."

As with CHS/Moses Taylor deal, Geisinger and CMC officials would not disclose the value of their merger. However, Danville, PA-based Geisinger said it would invest $158.6 million over seven years to enhance clinical programs, increase physician recruitment, expand and improve facilities, and implement new information systems—including Geisinger's electronic health record technology.

"This new relationship will allow the merged organization to build programs, grow services, improve health outcomes and demonstrate value," said Geisinger President/CEO Glenn D. Steele Jr., MD. "Together, we will enhance our ability to provide superior care and service for all the residents of Scranton and the surrounding area."

No layoffs for CMC's workforce are expected with the merger. The medical center will maintain its open medical staff that includes both employed and independent, community physicians. Steigmeyer will remain president/CEO at CMC, and two members of CMC's Board of Directors — Chair Jeff Jacobson and Vice Chair Virginia McGregor — will be added to the Geisinger Board of Directors.

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

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