Swayed by a community preference for local control, a two-campus healthcare system in Massachusetts last week chose to affiliate with a fledgling regional not-for-profit power rather than accept a buyout offer from Tenet Healthcare Corp.
HealthAlliance, with facilities in Leominster and Fitchburg in north central Massachusetts, agreed to a corporate restructuring under which its governing board will cede voting control to UMass Memorial Health Care.
But HealthAlliance will retain its assets, liabilities and endowment funds, and it will receive more than $50 million in capital and community-service funding from UMass Memorial.
The HealthAlliance system has 180 acute-care beds, 289 long-term-care beds and revenues of $297 million. It includes Leominster Hospital and Burbank Hospital in Fitchburg.
UMass is a combination of two healthcare systems that are in the last stages of a merger of their own: state-owned University of Massachusetts Clinical System and not-for-profit Memorial Health Care (Dec. 8, p. 17).
Investor-owned Tenet had offered to acquire HealthAlliance for about $80 million, which included $22 million in debt repayment, said HealthAlliance spokeswoman Carolyn Castel.
An endowment of $12 million was to be turned over to a community foundation under the Tenet plan, and the makeup of a governing board was to be an even split of local community leaders and local physicians.
But the overriding issue was community support for UMass Memorial, Castel said. "The public campaign on this has been very vigorous," she said, with the clear majority of community groups, city council members and state representatives from the area weighing in for UMass.
The opposition to Tenet also demonstrated that ownership status of hospitals is still an issue and continues to be a major hurdle for for-profit healthcare in the state, Castel said.
Only two hospital organizations have converted to for-profit status in Massachusetts, both in 1996: St. Vincent Healthcare System in Worcester, acquired by Tenet, and MetroWest Medical Center in Framingham, which sold an 80% interest to Columbia/HCA Healthcare Corp.
Columbia has folded its tent in Massachusetts after originally considering MetroWest the foothold for a regional network. MetroWest now is among the 45 hospitals Columbia has slated to be spun off into a new company called the Atlantic Group.
But Tenet spokesman Harry Anderson said although company officials lost out in Leominster, "we are undeterred from our goal of becoming a premier integrated delivery system in New England."
The Santa Barbara, Calif.-based hospital chain's "intent is to be a long-term player in New England," Anderson said. "Our goal is not dependent on acquiring any particular hospital."
UMass, the winning bidder for HealthAlliance, also is Tenet's main competition in Worcester, the state's largest city after Boston.