Montefiore Health System announced Monday that it will acquire St. Luke's Cornwall Hospital, a struggling hospital in New York's Hudson Valley.
The deal would add St. Luke's to Montefiore's growing health system.
Montefiore, based in the Bronx borough of New York City, owns 10 hospitals, including a recently acquired hospital in Westchester, N.Y.
St. Luke's Cornwall Hospital, which has campuses in Cornwall and Newburgh, N.Y., began searching for a partner last year. The hospital has reported operating losses and working capital deficiencies since 2012, and that's gotten the hospital into trouble with lenders. “These conditions raise substantial doubt about the hospital's ability to continue,” the hospital's auditors said in December and in 2013.
The hospital's operations lost $7.4 million on revenue of $177.6 million in 2014. Combined with other losses, including from investments and pensions, the system's net loss last year totaled $21.5 million.
“We had our financial challenges here at St. Luke's Cornwall,” said Joan Cusack-McGuirk, the hospital's interim CEO, at a news conference announcing the deal.
Montefiore has “really, really given us a great deal of sweat equity, their physicians are becoming our physicians, they're working with us as they really advance our care management and our population health strategy.”
Montefiore won't immediately provide capital investment or financial aid to address St. Luke's financial problems, said Jeffrey Menkes, Montefiore's senior vice president for health system network development. Instead, Montefiore will work closely with St. Luke's to improve its operations over time.
"We take a long-range view of relationships,” Menkes said.
Montefiore Health System will act as a “passive parent” under the deal. Menkes said that will give St. Luke's Cornwall Hospital more autonomy and responsibility over decisions regarding the hospital's management, operations and finances.
The deal must undergo the customary approval process.
The hospital is a strategic acquisition. St. Luke's Cornwall is a key provider in an area that's included in Montefiore's contract with the state of New York. The state is undergoing a sweeping overhaul of Medicaid, in a program known as the the delivery system reform incentive payment. The goal is to reduce readmissions and improve population health.
