Vanguard plans Conn. joint venture

(Story updated with comment from Waterbury Hospital.)

Vanguard Health Systems, Nashville, has entered into an agreement to form a joint venture that will operate Waterbury (Conn.) Hospital.

The publicly traded system has inked a letter of intent to form a limited liability company with the Greater Waterbury Health Network, which owns the 192-bed hospital. Vanguard would own 80% of the joint venture.

Matthew Burgard, a spokesman for Waterbury Hospital, noted that the parties hope to have a definitive agreement in place within 45 days, and the deal would then progress through the certificate-of-need process.

He added that the deal would help Waterbury prepare for the challenges under healthcare reform, providing it for example with the tools to boost physician recruitment as well as a capital injection.

Trip Pilgrim, senior vice president and chief development officer at Vanguard, noted that the joint venture could take several months to close. He declined to disclose financial terms, but said that Vanguard will maintain Waterbury's leadership team.

Under the deal, a 12-member board would run the joint venture and consist of six representatives from Waterbury and six from Vanguard, according to Burgard. Carl Contadini, who chairs the hospital's current board of directors, would serve as the first chairman of the new board for a three-year term, he noted.

The joint venture would also establish a community advisory board of six Waterbury physicians and six community members.

The deal would be Vanguard's first in Connecticut, but the system is already present in Massachusetts with MetroWest Medical Center, with hospitals in Framingham and Natick, and St. Vincent Hospital, Worcester.

“We like to grow regional platforms,” Pilgrim said. “We believe in regional platforms.”

Asked about other buys in the region, he added, “We're always looking to grow our footprint.”

LHP Hospital Group, Plano, Texas, and St. Mary's Health System, Waterbury, last year sought to include the Greater Waterbury Health Network in their own joint venture, in which LHP would hold an 80% stake.

Burgard noted that the deal unraveled in late August after “we couldn't get to a solution on some of the key issues.” The hospital had previously identified Vanguard as a preferred buyer, but Burgard said LHP had offered Waterbury the possibility of building a new hospital. That plan has now been tabled, he noted.