For-profit system to buy Mercy campuses in Scranton

March 1, 2011

Community Health Systems of Franklin, Tenn., plans to purchase three Catholic hospitals and affiliated outpatient facilities in Scranton, Pa., through an agreement announced on Feb. 10.

CHS will acquire Mercy Hospital Scranton; Mercy Tyler Hospital in Tunkhannock, Pa.; and Mercy Specialty Care, a long-term acute care hospital in Nanticoke, Pa., from Mercy Health Partners-Northeast, part of Catholic Health Partners.

The Scranton-area facilities operate in a crowded hospital market, and Mercy had sought a buyer that could make the investments necessary to keep the facilities competitive. The terms of sale also require CHS to have a commitment to charity care and other Catholic values. Mercy administrators said CHS met those qualifications.

Plans call for CHS to continue all essential services at the Scranton facilities for at least five years, to keep in place all staff and physicians in good standing and to maintain or improve upon the facilities' current charity care policies. CHS will make $68 million in capital investments in Mercy Northeast facilities within five years of the deal's completion.

Under CHS' ownership, the Mercy network will become for-profit, and its campuses will be renamed. The facilities no longer will be affiliated with their current sponsor, the Sisters of Mercy, nor with the Catholic Church; but CHS has agreed to maintain chaplaincy and spiritual care services at the hospitals and will keep religious statuary and imagery in the facilities. CHS has agreed not to perform abortions or euthanasia at the campuses.

With the transaction will come the creation of two new charitable foundations. Catholic Health Partners will donate $10 million to create a new community foundation that will focus on promoting health care in the Scranton, Tunkhannock and Nanticoke areas. This foundation also will receive a $2 million donation from CHS and additional funds currently held by the Mercy Health Foundation.

Also, Catholic Health Partners will contribute an additional $10 million to The Mid-Atlantic Community of the Sisters of Mercy. The sisters, the original sponsors of Mercy's Scranton-area facilities, will create and govern the second foundation, which will aim to create healthy communities and meet the needs of underserved people. Altogether, the two new foundations will oversee almost $25 million to benefit the local communities.

The CHS-Mercy agreement is under review by regulators, the church and others, a process that could take several months.

CHS is a publicly traded company that owns, operates or leases 126 hospitals in 29 states. Ten of these facilities are in Pennsylvania.

 

Copyright © 2011 by the Catholic Health Association of the United States
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