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Business Roundup: Barnabas Health, RWJ Health Complete Merger

News  |  By John Commins  
   April 04, 2016

The latest spate of round of mergers and acquisitions includes announcements from Sanford Health, Community Health Systems, the Westchester Medical Center Health Network, and Tenet.

Barnabas Health and Robert Wood Johnson Health System have finalized the previously announced merger of their two health systems to form what they're calling "the most comprehensive health system in the state of New Jersey."

Financial terms were not disclosed.

The renamed RWJBarnabas Health is now the biggest health system in the state of New Jersey, with 11 acute care hospitals, three pediatric acute care hospitals and a pediatric rehab hospital, a freestanding 100-bed behavioral health center, and outpatient and ambulatory care centers scattered throughout the region, a medical group, and four accountable care organizations.

The health system is expected to reach about 5 million people, more than half the population of the state. Combined, they will have $4.5 billion in revenues, 260,000 inpatient admissions, 2 million outpatient visits, nearly 700,000 emergency department visits, 23,000 births, according to media reports.

RWJBarnabas Health also becomes New Jersey's second largest private employer, with more than 32,000 employees and 9,000 physicians. It will train more than 1,000 residents and interns annually.

Barnabas Health President/CEO Barry H. Ostrowsky becomes RWJBarnabas Health's president/CEO.  Former Robert Wood Johnson Health System and Robert Wood Johnson University Hospital President/CEO Stephen K. Jones becomes Chief Academic Officer in the Office of the President. 

"By joining together, we have created the most comprehensive health system in the state, which will enable us to effect the kind of change in the health of our communities that our two separate systems could not do alone," Ostrowsky said in prepared remarks. "Our partnership also means a greater level of diversity in every respect—diversity in thought, clinical care delivery and workforce—a true reflection of New Jersey and of the people we serve."

Under the agreement, the two health systems have implemented a member substitution, creating a new organization based in West Orange. RWJBarnabas Health is being led by a single board of trustees and a single leadership team composed of executives from both organizations.

The new board includes equal board representation from Barnabas Health and Robert Wood Johnson Health System, as well as the CEOs of both organizations. 

HealthAlliance (NY) Joins WMC Health Network
Kingston, NY-based HealthAlliance of the Hudson Valley has joined the Westchester Medical Center Health Network. The affiliation gives HealthAlliance greater access to WMC's physician network and purchasing power, the two health systems said in a media release.

"We couldn't be happier with the relationship," said David Scarpino, president/CEO, HealthAlliance. "It ensures that our community will receive the highest-quality healthcare, locally, now and well into the future. The agreement strengthens HealthAlliance's existing healthcare offerings while providing new and more advanced services to meet a full range of patient needs."

Under the affiliation, Scarpino says Health Alliance will continue to provide critical access and skilled nursing services in the Margaretville area while building a "medical village" of ambulatory services at its Broadway Campus.

WMC Health already partners with MidHudson Regional Hospital in Poughkeepsie and Bon Secours Charity Health System, which has hospitals in Suffern, Warwick and Port Jervis.

"HealthAlliance has been — and now will continue to be — a conduit for high-quality care for Ulster and Delaware County residents," WMC Health CEO/President Michael D. Israel said in prepared remarks. "WMCHealth will play an integral role in ensuring the continuation and enhancement of these services."

Under the affiliation, which was finalized on Thursday, WMCHealth will be the sole corporate member of HealthAlliance and will oversee its hospital operations, as well as operations at other HealthAlliance facilities.

WMCHealth is a 1,900-bed healthcare system headquartered in Valhalla, NY, with 10 hospitals on seven campuses spanning 6,200 square miles of the Hudson Valley. WMCHealth employs more than 12,000 people and has nearly 3,000 attending physicians.

Sanford Health Buys Tracy (MN) Medical Center

Sanford Health has purchased Sanford Tracy Medical Center, a 25-bed hospital that was operated by Sanford Health, but owned by the City of Tracy. Financial terms were not disclosed for the sale, which was finalized on March 31.

Sanford Mayor Steve Ferrazzano called the deal "a win-win situation for our town."

"We'll retain quality healthcare close to home, and the city will no longer have the financial responsibilities that come with owning a healthcare facility. This frees up taxpayer dollars for other projects," Ferrazzano said in prepared remarks.

Under the agreement, Sanford will own the medical center buildings and grounds.  Employees of Sanford Tracy Medical Center will not see any changes as they were already employed by the health system.

Sanford Tracy Medical Center CEO Stacy Barstad promised "a seamless transition for our patients and employees." The medical center includes the general, surgical hospital, a clinic, and outpatient medical specialty services.

Sanford Health, headquartered in Fargo, ND, and Sioux Falls, SD, is one of the largest health systems in the country, with 43 hospitals and nearly 250 clinics in nine states.

Tenet Finalizes $575M Sale of 5 Atlanta-area Hospitals
Tenet Healthcare Corporation has completed the sale of its five Atlanta-area hospitals and related operations to WellStar Health System in exchange for $575 million in cash, effective March 31, the Dallas-based company announced.

As part of the deal, Tenet will retain some net working capital accounts and WellStar will assume certain capital leases related to the operation of the acquired facilities.

Tenet and WellStar announced the deal on Dec. 1, 2015, which includes Atlanta Medical Center and its South Campus, North Fulton Hospital, Spalding Regional Hospital, Sylvan Grove Hospital and 26 physician clinics.

With the deal finalized, Tenet no longer operates in the state of Georgia. In a conference call with analysts last May, Tenet CEO Trevor Fetter explained the exodus.

"There are markets where we don't see a path either by acquisition or partnership to develop the scale we believe will be necessary as healthcare delivery continues to evolve. In those markets, we believe our hospitals would be better positioned under another operator," he said.

"For example, we continue to pursue strategic alternatives for our hospitals in Georgia and North Carolina and expect this process will likely result in sales of these facilities."

CHS Acquires Fayetteville, AR Hospital
Community Health Systems, Inc. has acquired an 80% ownership interest in 20-bed Physicians' Specialty Hospital in Fayetteville, AR. Financial terms were not disclosed.

The hospital is located in the Arkansas region served by Northwest Health, a CHS-affiliated network with three hospitals, four convenient care centers and associated outpatient clinics.

"The addition of Physicians' Specialty Hospital in Fayetteville deepens our network of facilities in northwest Arkansas, one of the fastest-growing markets in the U.S.," CHS CEO Wayne T. Smith said in prepared remarks. "The physicians and providers of this hospital have established a strong reputation for quality care, and we look forward to working with them as we coordinate and strengthen clinical services for the region."

Franklin, TN-based CHS owns, leases or operates 198 affiliated hospitals in 29 states with an aggregate of approximately 30,000 licensed beds.

The company has announced plans for a spin-off transaction to create a new, publicly traded company, Quorum Health Corporation, with 38 affiliated hospitals and related outpatient services in 16 states. The transaction is expected to close during the first half of 2016.  

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

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