Indiana University Health in Indianapolis will enter a two-hospital joint venture with Community Health Systems as part of its move to scale back its acute-care operations.
Publicly traded Community Health Systems will acquire 80% of not-for-profit IU Health's hospitals in La Porte, Ind., and Knox, Ind. It's part of IU Health's outpatient care expansion and the growth of its health insurance arm, MDwise.
IU's decision to divest two hospitals comes after it closed another hospital in April and announced it would launch a dozen urgent-care clinics in 2016. Its hospital in Martinsville, Ind., which closed last spring, now operates an emergency department and offers outpatient care.
The deal, which is expected to close in the first quarter of 2016, will leave IU Health with 15 hospitals.
IU Health acquired hospitals and physicians in a big growth push over eight years. Then came a plan to slash operating expenses, including layoffs, which bolstered the system's operating margin. In September, the system named a new CEO, Dennis Murphy.
IU Health ended the first nine months of the year with an operating margin of 13.2% on revenue of $4.5 billion. The system's premiums from health plan enrollees increased 66% to roughly $300 million, compared with the first nine months of the prior year