Tenet Healthcare Corp.
, Dallas, plans to acquire the assets of St. Mary's Hospital in Waterbury, Conn., potentially giving the investor-owned hospital chain ownership of five hospitals in the state.
In June, Connecticut Gov. Dannel Malloy signed a bill
that essentially opened the door for for-profit entities to buy not-for-profit hospitals, pending rigorous review from state officials. Previously, the state had tight restrictions on hospital and physician group ownership, and previous efforts
looked to prohibit not-for-profit hospitals from converting to for-profits altogether. The only for-profit hospital in the state is Sharon (Conn.) Hospital, which was sold to Essent Healthcare (now RegionalCare Hospital Partners) because of dire financial problems.
The hospital landscape in Connecticut is now quickly changing, almost single-handedly because of Tenet. Vanguard Health Systems, which Tenet took over last year, was in the process of purchasing Bristol (Conn.) Hospital; Eastern Connecticut Health Network, a two-hospital system with facilities in Manchester and Rockville; and Waterbury (Conn.) Hospital. Those deals are still awaiting regulatory approval. Tenet also agreed to a loose partnership with Yale New Haven (Conn.) Health System
Its latest proposed acquisition of St. Mary's Health System, the parent of the 168-bed hospital, would give Tenet control of both acute-care facilities in Waterbury, a city of about 110,000 people, according to the U.S. Census Bureau. St. Mary's and Waterbury Hospital are about a mile and a half from each other, but there are no immediate plans to merge them into one, according to a statement on St. Mary's website
. No jobs or clinical services are expected to be eliminated. The two facilities previously had a joint venture
lined up with LHP Hospital Group, Plano, Texas, but the deal crumbed in 2012 because of differences in “key issues,” Waterbury Hospital said at the time.
St. Mary's, a Catholic hospital that had been looking for a partner for four years, will continue to operate under the church's ethical and religious directives. Proceeds from the transaction also will go toward St. Mary's not-for-profit foundation.
Finances have been relatively stable at St. Mary's, with the system posting an $8.7 million operating surplus (PDF)
on $263.9 million in revenue in fiscal 2013, resulting in a 3.3% operating margin. But officials said Tenet will offer investments in technology, facility upgrades, physician recruitment and other services that the hospital could not afford on its own.
“Our community and our caregivers will benefit immensely from the capital and expertise that Tenet will bring to St. Mary's,” St. Mary's CEO Chad Wable said in a release
Connecticut's office of the attorney general did not comment specifically on the deal. Spokeswoman Jaclyn Falkowski released the following statement: “Our review … and approval is required whenever a nonprofit hospital enters into an agreement to transfer a material amount of its assets or operations to a for-profit entity. Additionally, we have the primary responsibility under our state antitrust laws to review the antitrust implications of any such transaction. We will review the proposed transaction in accordance with our authority under the law.”
The deal also will require federal and church approval.Follow Bob Herman on Twitter: @MHbherman