“Small systems like Jameson are understandably trying to figure out where they fit into that landscape among those two behemoths,” said Rex Burgdorfer, a vice president at Juniper Advisory, an investment banking firm that advises providers on merger and acquisition transactions.
UPMC already has a presence in the region. UPMC Horizon, a 159-bed hospital, has campuses located in nearby Greenville and Farrell, Pa. UPMC officials said the merger would allow the system to cut costs and better coordinate care in the region, common refrains heard in the healthcare industry’s consolidation wave. Jameson ultimately chose UPMC as its partner because of its proximity and strong financial background.
“It will preserve and enhance our ability to provide exceptional healthcare close to home,” said Jameson board Chair Steve Warner in a release. “It’s important to our community that Jameson continues to operate as a not-for-profit system and remains a vital economic driver for our area.”
Jameson, which has 1,300 employees and about $128 million in annual revenue, has seen red ink grow the past two years. In fiscal 2013, ended June 30, 2013, the system posted an operating loss of $3.3 million, a year after it had a $1.8 million operating loss. Jameson’s cumulative net deficit in 2012 and 2013 was about $1 million.
UPMC, which recently announced plans to issue $400 million in bonds to fund capital projects, has not acquired another hospital since last year, when it absorbed what is now known as UPMC Altoona (Pa.).
The system is months away from formally breaking ties with Highmark, which will leave many UPMC facilities and physicians out of network for Highmark members.
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