Ascension Health, St. Louis, will add another hospital to its sizable Michigan operations in a deal to acquire a struggling solo hospital in that state.
Crittenton Hospital Medical Center, Rochester, Mich., signed a definitive agreement with Ascension after six months of preliminary negotiations. The deal would expand Ascension's Detroit-area operations. Rochester is north of Detroit, as are Ascension's St. John Providence Health System, Warren, Mich., and Genesys Health System, Grand Blanc, Mich.
Michigan remains a strategically important market for Ascension, though the state no longer accounts for as much of the system's operating revenue as it once did. Still, Ascension already has a dozen Michigan hospitals and in December 2014 acquired a Michigan insurer with licenses in 20 states. Earlier that year, Ascension launched an integrated network with another major Michigan-based hospital operator, Trinity Health.
Crittenton has struggled with operating losses in recent years, and credit-rating agency Standard & Poor's lowered its rating for the hospital to BBB in February. The hospital has lost ground to competitors, the rating analysts said.
The independent 290-bed hospital announced in January it had selected Ascension as a possible partner after soliciting offers. It will benefit from Ascension's size and resources, the system said in a news release announcing the agreement. Terms of the deal were not disclosed.
As part of Ascension Health, the largest not-for-profit health system in the country, the hospital will enjoy the support of a national system with shared clinical best practices and cost efficiencies. “We soon will begin to align our centers of excellence and invest in expanding key programs,” Gwen MacKenzie, Ascension Health senior vice president and Michigan ministry market executive, said in the news release.
The hospital ended the first six months of the year with an operating loss of $2.2 million on revenue of $111.2 million.
Ascension ended its last fiscal year with an operating surplus of $605.8 million on revenue of $20.1 billion.
"Those we serve will have the perfect combination of a community hospital atmosphere and convenience, supported by access to a large network of specialists, technology, tertiary services and trauma services,” Robert Lenihan, chairman of the Crittenton board, said in the release. “This is very positive news for the community we have served for nearly 50 years. Our physicians are already collaborating to plan comprehensive, integrated services and networks of care.”
