Capital Health signed a definitive agreement to acquire Trinity Health's St. Francis Medical Center, the New Jersey-based health systems announced Wednesday.
Capital Health operates Capital Health Medical Center—Hopewell in Pennington and Capital Health Regional Medical Center in Trenton, which is two miles away from St. Francis. Preserving and strengthening healthcare services in Trenton will be a priority, executives said.
The deal, which started with a letter of intent in May, now awaits customary state and federal regulatory approval.
"Over the last several years, as Capital Health has continued to grow and expand its geography, one thing I have been very clear on is our enduring commitment to Trenton," Capital Health CEO Al Maghazehe said in a news release. "This undertaking demonstrates that and will be complemented by other significant investments Capital Health will make to develop programs focusing on the broader needs of our neighbors, bringing a holistic approach to their well-being."
St. Francis was Mercer County's first hospital in 1874, and remains its only comprehensive cardiac surgery provider. St. Francis' cardiac care would complement Capital Health's neuroscience, trauma, cancer, maternity, orthopedics, emergency and behavioral health service lines, executives said.
Capital Health has a medical group that includes more than 20 primary-care practices and dozens of specialty practices. In addition to the academic medical center, Capital Health would acquire St. Francis' physician group, its schools of nursing and radiology and its internal medical residency program.
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St. Francis, which has operated as a Catholic hospital under Trinity, would be secular under Capital Health. Operational transitions regarding the Catholic Church's Ethical and Religious Directives for Catholic Health Care Services have been a sticking point of some acquisitions.
"The Trustees of St. Francis Medical Center spent countless hours identifying the best solution to continue the mission of the Sisters of St. Francis to provide health care in the City of Trenton," said Joseph Youngblood, board chair of St. Francis Medical Center. "Our strengths, coupled with those of Capital Health, a regional healthcare leader, will improve services for residents by offering a fully integrated network of services in the city of Trenton."
Trenton, New Jersey's hospital market was highly concentrated as of 2019, according to data from the Health Care Cost Institute. While the city's overall healthcare prices were 12% higher than the national median in 2019, its inpatient prices were on par with the median, HCCI data show.
Trinity Health tried to sell St. Francis to Cooper University Health Care along with two other hospitals, but Cooper backed out in late 2017.
Trinity Health, reported $657.6 million of operating income on $20.16 billion of operating revenue in 2021, up from a $344.7 million operating loss on $18.83 billion of operating income in 2020. The health system received $489.2 million in COVID-19 relief grants last year.
St. Francis, one of Trinity's around 88 hospitals, reported a $942,000 operating income in 2021, breaking a multi-year streak of operating losses. It recorded a $20.2 million operating loss in 2020.
Capital Health recorded a $16.9 million operating loss on $789.1 million of revenue in 2020, according to the most recent annual financial data available. That was down from a $9.6 million operating income on $743.8 million of revenue in 2019.
The health system received $67.4 million in COVID-19 relief grants in 2020.