Crittenton Hospital Medical Center has signed a letter of intent to join Ascension Health, selecting the St. Louis-based system from a number of suitors.
The two parties will enter a six-month due diligence process to work out the details of the transaction.
Rochester, Mich.-based Crittenton began its search for a partner several months ago after a challenging year. Citing the hospital's operating losses, both Standard & Poor's and Moody's Investors Service had lowered the credit rating (PDF) on Crittenon's bonds by one notch (PDF) with a negative outlook in the fourth quarter of 2013.
Although its financial performance improved in 2014, being part of Ascension will allow Crittenton to strengthen its service lines, build volume and participate in the larger system's clinical network, the hospital said in a news release.
Ascension, which has more than 100 hospitals, including about a dozen in the state of Michigan, last year formed the Together Health Network with Trinity Health, creating the framework for contracting with managed-care organizations and experimenting with value-based payment models.
Crittenton is located about halfway between Ascension's St. John Providence Health System, which serves the Detroit metro area to its southeast, and Genesys, which serves patients in Grand Blanc, another 35 miles to its northwest.
Other systems interested in Crittenton included McLaren Health Care Corp., Trinity Health's St. Joseph Mercy Health System, Henry Ford Health System and one other unconfirmed party, rumored to be Beaumont Health, according to Crain's Detroit Business, a sister publication to Modern Healthcare.
Crittenton reported an operating surplus of $545,574 on revenue of $173.1 million for the first nine months of 2014. Its performance improved from an operating loss of $9.4 million on revenue of $53.3 million during the same period in the prior year.
Discharges increased 174%, or 182% when adjusted for outpatient activity. Patient acuity also increased year over year.
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