Trinity Health, one of the nation's largest health systems, closed on a deal to sell a Michigan hospital under a strategy to shed struggling hospitals.
Trinity's sale of St. Joseph Mercy Port Huron (Mich.) to Prime Healthcare Services, Ontario, Calif., is one among several pending or potential deals under consideration by Trinity executives in an effort to divest “stressed assets,” say analysts who follow the health system.
For Prime, the Michigan hospital is the latest in a string of acquisitions as the for-profit hospital operator rapidly expands outside of California and Texas. Prime has two other deals pending for Trinity Health hospitals in New Jersey and Pennsylvania.
Prime Healthcare pledged to invest $30 million in the Port Huron hospital, which has struggled with operating losses. For the nine months that ended in March, the hospital lost $2.5 million on revenue of $56.8 million.
Trinity Health is seeking to sell “stressed assets” to bolster its finances while making investments in growth markets, such as Connecticut, according to Moody's Investors Services.
Trinity Health, Livonia, Mich., was formed from the 2013 merger of Trinity Health and Catholic Health East and operates across 21 states.
The sale of the Port Huron hospital, first announced in November 2014, will likely be welcome by Moody's analysts who have described Trinity's efforts to exit struggling markets as a drain on its resources.
"Over the past several years St. Joseph Mercy Health System and Trinity Health have been developing a highly integrated care delivery system in southeast Michigan," said Rob Casalou, regional president and CEO of St. Joseph Mercy Health System. "However, St. Joseph Mercy Port Huron's distance from other SJMHS hospitals and outpatient centers have challenged the ability of SJMHS to integrate operations and prepare for population health management in the best interest of the community."