Blog: Capital (and competition) drive solo hospital into merger

Chilton Hospital officials saw greater access to capital for ambulatory expansion, information technology and other investments to prepare for accountable care as one compelling reason to join a larger health system.

Another reason: The possible arrival in New Jersey of the joint venture between Ascension Health Alliance and the private equity firm Oak Hill Capital Partners to build a Catholic for-profit health system.

Deborah Zastocki, president and CEO of Chilton Hospital, said the independent hospital, which announced board approval for a merger with Atlantic Health System this week, reconsidered its solo status in response to changes in healthcare delivery, but also potential changes to New Jersey's healthcare marketplace.

Chilton's original intent was to remain independent, she said. Then the for-profit Ascension Health Care Network moved to “acquire the hospitals on either side of us.”

The Ascension Health Care Network said in February it was in talks to acquire two New Jersey hospitals in Passaic and Paterson. A month later, it announced talks to acquire St. Clare's Health System with New Jersey hospitals in Denville and Dover.

Talks between the Ascension Health Care Network and hospitals in Passaic and Paterson later broke down, but negotiations for St. Clare's continue.

Zastocki said the Chilton Hospital board vetted multiple options before deciding on a merger and Atlantic Health.

Directors realized access to capital of a larger system would allow for needed investment—a new medical office building, hospital renovations, IT—without weakening its balance sheet. And joining a larger system would give the hospital access not only to capital but also to expertise that will better position the hospital for accountable care and population health, she said.

The merger, which is entering due diligence and must be reviewed by state regulators, is expected to close mid-2013.

You can follow Melanie Evans on Twitter: @MHmevans.



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