HMA to Buy Mercy Health for $525M

Health Management Associates announced on Friday that it has entered into a definitive agreement to acquire the assets of Mercy Health Partners-Tennessee from Catholic Health Partners. The$525 million deal is expected to close by Oct. 1.

HMA will acquire or lease all seven of MHP's hospitals. The deal includes substantially all of Mercy's ancillary healthcare operations in the Knoxville, TN area that are associated with the operations of the seven hospitals, as well the campus of the former Riverside Hospital.

The lease for at least one of the hospitals, St. Mary's Medical Center of Scott County in Oneida, will expire in May 2012. According to a report from WBIR TV in Knoxville, two companies are in the running for that lease ? Pioneer Health Services in Magee, MS and Downy Enterprises LLC of Cookeville, TN.

HMA and Catholic Health Partners began negotiations for the health system in May. Mercy Health Partners-Tennessee has annual net revenue of approximately $600 million, according to HMA. Catholic Health Partners is exiting the Tennessee market.

Naples, Fla.-based HMA already owns four hospitals and a surgical center near Nashville. The for-profit company operates 66 hospitals in 15 states, including Alabama, Florida, Texas, Washington and West Virginia.

In a press statement Jeffrey A. Ashin, president and CEO of Mercy Health Partners, said "Through Health Management, our hospitals will be able to invest in their facilities and new technologies, and provide the training needed to ensure Mercy continues to provide the best, most current care available in our communities. For these, and many other reasons, I strongly believe that Health Management Associates is the perfect match for Mercy Health Partners."

The sale means the health system will no longer have an official Catholic affiliation. A name change is also expected for the health system.

In May Catholic Health Partners sold its Pennsylvania hospitals. It still own hospitals in Kentucky and Ohio.