CHRISTUS moves to sell majority share of Houston-area hospitals

October 15, 2013

Irving, Texas-based CHRISTUS Health plans to sell majority ownership of its two Houston-area hospitals, CHRISTUS St. Catherine Hospital and CHRISTUS St. John Hospital, to Houston Methodist. Houston Methodist currently has five hospitals, along with stand-alone emergency departments, imaging centers, physical therapy clinics and a research institute.

The boards of CHRISTUS Health and Houston Methodist entered into a letter of intent in September, the organizations said.

The transaction also includes the CHRISTUS provider network clinics in the Katy and Nassau Bay, Texas, areas and the CHRISTUS Stehlin Foundation for Cancer Research.

Under the agreement, CHRISTUS will retain a minority interest in both hospitals and a role in the governance oversight, and may have the option to manage St. Catherine as a post-acute facility. The exact percentage of ownership and governance role is being determined.

When the transaction closes, St. John in Nassau Bay will remain open as a general, acute care hospital following the Ethical and Religious Directives for Catholic Health Care Services, said leadership from both systems. It will be managed by Houston Methodist and renamed Houston Methodist St. John. Houston Methodist also will operate St. Catherine in the Katy area likely as Houston Methodist's first post-acute care facility, though plans have not been finalized, the systems said. Plans are for that facility to follow the Ethical and Religious Directives as it has previously, system executives said.

Ernie Sadau, president and chief executive of CHRISTUS Health, said partnering with Houston Methodist makes sense in the competitive Houston market, and he expects it will strengthen the systems. CHRISTUS includes more than 40 hospitals and facilities in seven U.S. states and in Mexico.

Sadau said the CHRISTUS Foundation for Healthcare will continue its work with CHRISTUS' sponsor, the Sisters of Charity of the Incarnate Word, in the region. "We'll continue to operate our 16 school-based clinics, our mobile clinics for the underserved, Our Daily Bread, our Point of Life Clinic, our two free clinics that we operate with the congregation in Houston."

Our Daily Bread provides support services to homeless men, women and children. The Point of Light Clinic, located 30 miles southeast of Houston in Dickinson, Texas, provides care in a medically underserved area.

Dr. Marc L. Boom, president and chief executive of Houston Methodist, said the deal with CHRISTUS allows Houston Methodist to expand its presence in the region with a "wonderful, faith-based partner." He said Houston Methodist had wanted a presence in the Clear Lake/Nassau Bay area, south of Houston. And he said the talks about St. Catherine becoming a post-acute care facility make sense at a time when health care is more focused on population management and bundled care and payments. Houston Methodist West Hospital is located about a mile from St. Catherine, he said.

Boom said the Stehlin Foundation for Cancer Research fits well with the academic work already being done by Houston Methodist.

Boom also said, while there are still many details to be worked out about the deal, Houston Methodist has committed to guarantee employment to all associates at CHRISTUS below the executive level.

The systems are working to complete the transaction by the end of the year.


Copyright © 2013 by the Catholic Health Association of the United States
For reprint permission, contact Betty Crosby or call (314) 253-3477.

Copyright © 2013 by the Catholic Health Association of the United States

For reprint permission, contact Betty Crosby or call (314) 253-3490.