Duke LifePoint Healthcare plans to extend its reach into yet another state, signing a letter of intent to take over Conemaugh Health System, a three-hospital group based in Johnstown, Pa., investing more than $500 million over 10 years
to acquire the not-for-profit system.
Duke LifePoint's nationwide expansion strategy
has taken it far outside its home market in the Southeast. In 2012, it acquired Marquette (Mich.) General Health System, which gave it a foothold in the Midwest, and it has since added two more hospitals in the state
. The Conemaugh deal would mark its first entry into Pennsylvania. Conemaugh's flagship facility is 555-bed Conemaugh Memorial Medical Center, about 70 miles east of Pittsburgh. Duke LifePoint has five hospitals in Michigan, North Carolina and Virginia, with deals pending for three more hospitals North Carolina.
The agreement, expected to close in the fall, includes the system's three hospitals as well as outpatient centers and physician practice groups. Conemaugh Health System reported a $5 million loss for the six months ended Dec. 31, with an operating margin of -1.95%, according to its most recent financial report
, which noted that its performance was worse than budgeted.
At two of its smaller hospitals, Miners Medical Center, Hastings, and Meyersdale (Pa.) Medical Center, patient admissions were about 30% lower than budgeted, compared with 3.8% under budget at its flagship campus.
Conemaugh's board of directors began the search for a partner several months ago in response to an increasing need for capital amid reimbursement cuts and falling patient volumes as well as to prepare the system to manage population health, a news release said.
The board, working with Juniper Advisory, selected Duke LifePoint from among several candidates.
Under the deal, Duke LifePoint will retain Conemaugh's current employees and services, and the system will be governed by a local board composed of community members, staff physicians, its CEO and a Duke representative.
The financial investment covers new inpatient and outpatient facilities, including new outpatient centers in the communities of Richland and Ebensburg; information technology and equipment upgrades; physician recruitment; and a medical education conference center.
Durham, N.C.-based Duke University Health System launched its joint venture with publicly traded LifePoint Hospitals, Brentwood, Tenn., in January 2011 with the acquisition of 102-bed Maria Parham Medical Center, Henderson, N.C.Follow Beth Kutscher on Twitter: @MHbkutscher