Geisinger, St. Luke's University Health Network to co-own hospital

Two Pennsylvania-based not-for-profit health systems are teaming up to build what they say will be their state's first hospital co-owned by two health systems.

Bethlehem-based St. Luke's University Health Network and Danville-based Geisinger announced Tuesday they plan to build and co-own an 80-bed hospital in rural Schuylkill County near Orwigsburg, a small borough with a 2016 population of roughly 3,000 people, according to Census Bureau data.

The systems say they will split construction costs equally. Once the hospital is up and running, it will be responsible for its own operating expenses and revenue, according to Sam Balukoff, director of operations for Geisinger's central region. However, if additional money is needed to support the hospital, both systems will contribute equally, Balukoff said in an email. The systems will also share governance of the hospital, and both will contribute physicians and specialty support staff.

"We know that many patients are leaving Schuylkill and Berks counties for hospital services," Geisinger's CEO Dr. David Feinberg wrote in a statement. "Our growing partnership with St. Luke's will not only expand the range of healthcare services in that community but perhaps, more importantly, will offer greater convenience so that patients, including many of our Geisinger Health Plan members, will receive the care they need right where they live."

The three-story, 120,000-square-foot hospital is slated to open late next year. The systems will host a groundbreaking ceremony this spring.

St. Luke's has operated its St. Luke's Miners Campus, a 44-bed acute-care hospital, in Schuylkill County since 2000, the system wrote in a news release. It also runs urgent-care and primary-care clinics in neighboring Berks County. Geisinger, meanwhile, has an outpatient clinic in Orwigsburg.

While St. Luke's already operates a hospital in Schuylkill County, it found that more than half of residents leave the county for hospital care, causing dissatisfaction, St. Luke's spokesman Sam Kennedy wrote in an email. Additionally, the county's newest hospital was built 100 years ago, he added.

Geisinger and St. Luke's entered into an agreement last year to collaborate on a health plan together. At the time, both systems were considering a new hospital in Schuylkill County, Kennedy said.

"It just made sense to do it together as equal partners," Kennedy wrote in an email.

Schuylkill County's overall poverty rate was 13% in 2015, which was in line with the state average, according to data from the Center for Rural Pennsylvania. More than 23% of the county's residents were eligible for medical assistance as of June 2016, compared with about 22% statewide, the center found.

Health systems co-owning hospitals is still relatively rare. Dallas-based Tenet Healthcare Corp. and Baylor Scott & White finalized a deal in 2016 to co-own five hospitals in northern Texas. Tenet as of March 1 restructured its joint venture agreement with Baylor Scott & White for three of those hospitals, with Baylor Scott & White acquiring Tenet's minority interest in two of them and taking over operations. The third hospital, Baylor Scott & White–Sunnyvale, is now part of Texas Health Ventures Group.