Chester County Hospital and Health System said it signed a nonbinding letter of intent to “join” the University of Pennsylvania Health System, Philadelphia.

Chester County Hospital and the University of Pennsylvania Health System spokeswomen declined interview requests. Susan Phillips, senior vice president of the University of Pennsylvania Health System, declined to say if talks included an acquisition of the 220-bed West Chester, Pa.-based hospital by the university health system. “Given that due diligence is now in process, and the confidential nature of the letter of intent, we will have no further comment at this time,” she said in an e-mail.

Chester County Hospital reported an operating loss of $2.1 million on revenue of $293.4 million in the year ended last June. That's compared with a $10.9 million operating gain on revenue of $291 million the prior year.

The University of Pennsylvania Health System finished its fiscal year last June with operating income of $217.2 million on revenue of $3.6 billion.

Chester County Hospital's board of directors said in statement last August that “the rapidly changing landscape and the increasing demands placed upon the healthcare industry are causing many independent hospitals and health systems across the country to consider new options and models of care.” The board approved a committee to “evaluate strategic corporate partnerships” the statement said.

The prospective partners expect a deal, which must undergo regulatory review, to close this spring, the Chester County Hospital and Health System said on its website.