What a difference a year has made for Bon Secours Health System.
Last year, the 17-hospital system focused on expanding post-acute-care services after a previous growth spurt more than doubled its hospital holdings (June 8, 1998, p. 30).
This year, Bon Secours is in talks to grow by more than 50% by acquiring a nine-hospital Roman Catholic system with facilities in five states.
For Bon Secours, the chance to buy Albany, N.Y.-based Franciscan Health Partnership is an opportunity not to be missed, said Christopher Carney, chief executive officer of Marriottsville, Md.-based Bon Secours.
"The opportunity for us is to preserve and strengthen a Catholic health ministry," he said.
The two systems moved one step closer when they signed a nonbinding memorandum of understanding April 30 to negotiate a deal (May 3, p. 4). Officials said that a definitive agreement is expected within several months.
The due-diligence process has just begun, and key details still need to be hammered out, including the sale price.
The possibility of linking the two systems arose last December after Bon Secours received a letter from Franciscan soliciting interest in their system.
Carney said the Bon Secours board of directors gave permission in January to pursue a deal.
Mike Hoffman, a Franciscan spokesman, said his system's sponsoring religious order, New York-based Franciscan Sisters of the Poor, is selling the system because it wants out of the day-to-day business of healthcare.
After looking at other partners, Bon Secours was deemed "the best match for us," Hoffman said.
A previously proposed systemwide merger between Franciscan and Cincinnati-based Catholic Healthcare Partners was canceled in January. However, Franciscan did merge its two hospitals and other holdings in the Cincinnati area with Catholic Healthcare Partners (Feb. 1, p. 4).
Franciscan and Bon Secours have no overlapping acute-care hospital markets, although both have hospitals in South Carolina: 145-bed Bon Secours-St. Francis Xavier Hospital in Charleston and Franciscan's 237-bed St. Francis Health System in Greenville.
Bon Secours also has facilities in Florida, Maryland, Michigan, Pennsylvania and Virginia (See story, p. 66).
Franciscan operates hospitals in Kentucky, New Jersey, New York and Ohio.
For the fiscal year ended Aug. 31, 1998, Bon Secours had net income of almost $39 million on total revenues of $1.2 billion, according to the system.
Franciscan's 1998 financial information was not available. In 1997 Franciscan had net income of $13 million on total revenues of $974 million, the system.said.
In February, Moody's Investors Service downgraded Franciscan's rating on $265 million of debt to Baa2 from Baa1.