Healthcare Business News

Holy Spirit's Geisinger affiliation awaits Pennsylvania's OK

By Bob Herman
Posted: June 23, 2014 - 2:15 pm ET

Geisinger Health System and Holy Spirit Health System, Camp Hill, Pa., have signed a definitive agreement that will convert Holy Spirit into an affiliate of the Geisinger network.

The two organizations had signed a letter of intent for the deal in September. The next step now is obtaining regulatory approval from the Pennsylvania attorney general's office, which system officials expect will go through in the next 30-45 days.

Holy Spirit is located about 70 miles south of Geisinger's Danville, Pa., headquarters. Holy Spirit fits Geisinger's growth strategy because Holy Spirit has a relatively strong financial position, is in a growing market, and needs help in managing the health of its population. “What we want to do is to bring higher quality for lower cost into that market,” Geisinger President and CEO Dr. Glenn Steele Jr. said in a media call. “We think that we have some structural advantages working together with Holy Spirit to do that.”

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The deal is similar in structure to the one Geisinger signed with AtlantiCare in Atlantic City, N.J., last month, Steele said. Holy Spirit's board will still be responsible for the operations and fiduciary responsibilities of the hospital. A recent continuing disclosure document (PDF) called the AtlantiCare transaction a “noncash merger.”

Both Geisinger and Holy Spirit have witnessed operating challenges so far this year but still have maintained profitability overall. In the first nine months of Geisinger's fiscal 2014, ended March 31, the system's operating surplus declined 28% to $89.7 million. Geisinger's revenue totaled $2.95 billion, resulting in a 3% operating margin compared with a 5.1% operating margin in the first nine months of fiscal 2013. Holy Spirit's operating surplus dropped 52% to $7.6 million on $240.2 million of revenue in its nine months ended March 31 (PDF).

Geisinger, a $3.4 billion system, comprises five acute-care hospitals, a multispecialty physician group with more than 1,100 physicians and a health plan. Holy Spirit includes a 290-bed hospital and $325 million of annual revenue.

Follow Bob Herman on Twitter: @MHbherman

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