Vanguard Health Systems' deal with Pittsburgh-based Allegheny Health, Education and Research Foundation might have broken up, but its East Coast acquisition strategy lives on.
Nashville-based Vanguard, a for-profit company, recently entered exclusive talks to explore a partnership with Barnert Hospital in Paterson, N.J. The 90-day negotiation period, announced July 1, could lead to a sale of the 190-bed acute-care hospital. If so, it would be the third conversion of a not-for-profit hospital to for-profit status in New Jersey since 1997.
Representatives of Vanguard recently lobbied against a not-for-profit hospital conversion bill being considered by state lawmakers. The bill, which failed to clear the state Senate before summer recess June 30, would have required state oversight of not-for-profit hospital conversions.
Although a number of systems have formed in New Jersey, Barnert remains unattached. About two years ago, the hospital entered discussions with Hackensack (N.J.) University Medical Center, to no avail. Last fall the 90-year-old acute-care hospital retained New York-based Shattuck Hammond Partners to help identify possible partners.
"I think there's a recognition that a stand-alone hospital has difficulty contracting in a managed-care environment," said Marilyn Katzman, Barnert's director of public relations.
Last year the hospital lost nearly $500,000 on revenues of $70 million, she said.
According to HCIA, a Baltimore-based healthcare information company, Barnert suffered financially in 1996 as well, posting a net loss of $12.2 million on net patient revenues of $64.4 million. In 1995 it earned $204,534 in net income on $78 million of net patient revenues.
For Vanguard, Barnert is a chance to gain a foothold in the largely not-for-profit state "and try to prove ourselves," said Beth Brisbane, a spokeswoman for the for-profit company.