Struggling Community Health Systems has agreed to sell its two-hospital system in Spokane, Wash. for $425 million.
MultiCare Health System is buying Rockwood Health System, which includes 388-bed Deaconess Hospital in Spokane, 123-bed Valley Hospital in Spokane Valley and the multi-specialty Rockwood Clinic. The companies said the price is subject to certain unidentified adjustments.
CHS is divesting hospitals and other assets to reduce a crushing $15 billion debt.
“Rockwood Health System is a strong healthcare system, and we have carefully considered how to position it for future success,” said CHS CEO Wayne Smith. “The hospitals and clinic will benefit from joining a growing regional health system that is expanding its network across the Pacific Northwest.”
Not-for-profit MultiCare owns five hospitals in the Tacoma area, including Tacoma General Hospital and MultiCare Good Samaritan. The system has annual revenue of about $2 billion, while the CHS system in Spokane has revenue of $525 million, MultiCare CEO Bill Robertson said.
The deal is expected to close in the first quarter of 2017 and is subject to regulatory approvals.
CHS is the nation's second-largest investor-owned hospital company with 158 hospitals.
Earlier this month, CHS said it was trying to sell 17 hospitals, its home-care business and other real estate. Those deals were expected to bring about $1.2 billion, all of which is to be used to reduce debt.
CHS, which is considering selling off its entire company, has a debt level 6.5 times EBITDA, an amount nearly twice that of rival HCA Holdings. CHS has struggled to digest its $7.6 billion acquisition of Health Management Associates in 2014.
It's made several moves to try and right its course. In April, CHS spun-off 38 small and rural hospitals into a separate company, Quorum Health Corp.
CHS said it would look to divest hospitals that were outside of its half-dozen or so core markets where it has multiple hospitals fed by physician clinics and ambulatory centers.