But that news paled against the political controversy that erupted around the planned sale ahead of the November elections.
Executives with CHP and Mercy Health Partners said last week that the proposed sale came after several unsuccessful efforts to consolidate a market with too many hospitals and years of flat or reduced pay from insurers. But the move was not spurred, as has been reported by conservative and Catholic commentators, by health reform, the executives say.
John Starcher, a senior vice president with Catholic Health Partners and CEO of the system's regional division, called the commentary “disappointing” and “unfortunate.”
Catholic Health Partners, which owns 32 hospitals and leases another two in four states, has limited resources and competing priorities for its investments, said Starcher. The system has “significant capital needs in every one of those markets,” he said, and executives could not responsibly invest in Scranton, where three rival hospitals—CHP's 244-bed Mercy Hospital, 214-bed Moses Taylor Hospital and 248-bed Community Medical Center—duplicate services and staff too many beds.
Starcher said the system was willing to make the investment and sought during that time to consolidate the market, but failed.
A spokeswoman for Moses Taylor declined to comment. Community Medical Center did not respond to requests for comment. Talks between Community Medical Center and Geisinger Health System, a three-hospital system based in Danville, Pa., broke off last December. Geisinger spokeswoman Patricia Urosevich said in an e-mail neither party commented on why talks ended; she said to the best of her knowledge, Geisinger has not entered into talks with Mercy Health.
Starcher said the Pennsylvania system's solid finances allow it to enter the market for a buyer with strength. CHP made the decision to put its Pennsylvania assets on the market this summer after two years of deliberation, he said. Mercy Hospital in Scranton reported an average operating margin of 0.87% between 2007 and 2009 and a 2.69% margin in 2009, state figures show.
Mercy Health Partners acquired Tyler Memorial Hospital on Jan. 1. The 58-bed hospital in Tunkhannock, Pa., renamed Mercy Tyler Hospital, reported an average operating loss during the same three-year period of 5.2%, state figures show.
The system also includes a long-term acute-care hospital in Nanticoke, Pa.; agencies for home health and hospice; a rehabilitation center; and outpatient facilities.
Scranton is the only Catholic Health Partners market where it does not rank as the largest or second-largest system, according to its financial statements.
Medicare payments account for more than half of Mercy's revenue, about 53%, the highest percentage of Catholic Health Partner's nine regional subsidiaries. Medicare reimbursement to hospitals is scheduled to decline under health reform.
Starcher said healthcare executives would be “irresponsible” to overlook reform's impact on hospitals, but the law did not drive the decision to put its Pennsylvania assets up for sale.
Officials at Mercy Health and the Catholic Health Association, which supported the health reform law, moved quickly to reject reports the law motivated the sale after Kevin Cook, the CEO and president of Mercy Health Partners, said the law was not a precipitating reason for the sale but played a role in the decision.
On television the day the sale was announced, Cook said: “Healthcare reform is absolutely playing a role,” he said. “But was it the precipitating factor in this decision? No. But was it a factor in our planning over the next five years. Absolutely.”
Sister Carol Keehan, president and CEO of the Catholic Health Association, said in a news release: “Reports that health reform is the primary motive behind the sale are completely false, misleading and politically motivated. Deliberations to sell the facilities began well before the Affordable Care Act became law and did not hinge on enactment of the legislation.”
In an interview last week, Cook again said the law did not prompt the sale.
Cook said Mercy Health is seeking a buyer willing to make investments in the system and who may be able to succeed where Catholic Health Partners failed at consolidating the market. He said Mercy Health had previously made various proposals, including acquiring rival hospitals, in efforts to consolidate the market. He declined to say what investments would be necessary, saying priorities would be determined by a new owner.