Trinity CHE cancels deal for St. Joseph in Syracuse, N.Y.

Trinity CHE, Livonia, Mich., has called off a deal to purchase 431-bed St. Joseph Hospital Health Center in Syracuse, N.Y.

The system, which already owns six hospitals in upstate New York, signed a nonbinding letter of intent with St. Joseph's in July but, after a three-month due diligence process, decided not to pursue a deal.

“We concluded that now is not the right time for us to come together,” President and CEO Judy Persichilli wrote in a letter to employees. “We believe a better alternative is to pursue a strategic affiliation agreement that enables us to share ideas and resources that can strengthen our ministries.”

Trinity CHE released the letter in a filing to bondholders.

St. Joseph gained some notoriety in July after a local newspaper discovered that doctors had mistakenly declared one of its patients dead and were preparing to harvest her organs when she opened her eyes. The state health department issued a $6,000 fine for the 2009 incident.

St. Joseph's reported $3.4 million in income on $267.7 million in revenue for the six months ended June 30, compared with $5.1 million in income on $257.8 million in revenue during the prior-year period.

Moody's on Friday said it is reviewing St. Joseph's for a possible credit rating downgrade, citing the hospital's plans to draw up to $70 million in bank debt to fund the installation of a “major information system.” It also said the hospital's cash position could be strained as it finishes construction on a tower project.

Catholic Health East and Trinity Health, which closed their merger on May 1, are in the process of divesting underperforming assets. Earlier this month, the group completed the sale of Mercy Health System of Maine, Portland, to Eastern Maine Healthcare Systems, based in Brewer. It is also in the process of selling St. Michael's Medical Center, Newark, N.J., to Ontario, Calif.-based Prime Healthcare Services.

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