Loss of in­de­pen­dence

Two Scran­ton hos­pi­tals to join larger sys­tems

Modern Healthcare - - Regional News - Jaimy Lee

The two re­main­ing in­de­pen­dent hos­pi­tals in Scran­ton, Pa., an­nounced deals last week to join larger, more fi­nan­cially sta­ble health sys­tems. Com­mu­nity Health Sys­tems, based in Franklin, Tenn., said it agreed to ac­quire the as­sets of Moses Tay­lor Health Care Sys­tem, a two-hos­pi­tal sys­tem that in­cludes 213-bed Moses Tay­lor Hos­pi­tal in Scran­ton, 25-bed Mid-Val­ley Hos­pi­tal in Peckville and the Physi­cians Health Al­liance in Dunmore.

Geisinger Health Sys­tem, Danville, Pa., an­nounced plans to merge with Com­mu­nity Med­i­cal Cen­ter, a 248-bed hos­pi­tal in Scran­ton.

The deals are ex­pected to bring in mil­lions of dol­lars in cap­i­tal in­vest­ments and are likely to in­crease competition in what hos­pi­tal ex­ec­u­tives say is a fi­nan­cially strug­gling health­care mar­ket.

“All three hos­pi­tals have strug­gled (fi­nan­cially) in re­cent years,” Geisinger Chief Op­er­at­ing Of­fi­cer Frank Trem­bu­lak said.

Geisinger plans to pump about $158.6 mil­lion into Com­mu­nity Med­i­cal Cen­ter over the next seven years, in­clud­ing $28 mil­lion pledged pre­vi­ously for an in­vest­ment in its pri­mary-care prac­tice group in Lack­awanna County.

CHS de­clined to pro­vide terms of the deal with Moses Tay­lor Health Care Sys­tem but said it had made a five-year, $60 mil­lion cap­i­tal in­vest­ment. CHS’ cap­i­tal in­vest­ment is sim­i­lar to the one it made when the health sys­tem ac­quired three north­east Penn­syl­va­nia hos­pi­tals, in­clud­ing Re­gional Hos­pi­tal of Scran­ton, from Catholic Health Part­ners this year.

The terms of that deal in­cluded a $150 mil­lion pur­chase price and an ad­di­tional $68 mil- lion cap­i­tal in­vest­ment.

“Re­gional Hos­pi­tal of Scran­ton and Moses Tay­lor Hos­pi­tal are a good strate­gic fit for each other,” CHS spokesper­son Tomi Galin said by e-mail. “We see a unique op­por­tu­nity for these two hos­pi­tals—with com­ple­men­tary ser­vices and ar­eas of clin­i­cal dis­tinc­tion—to form a more efficient and sus­tain­able health­care sys­tem.”

A Moses Tay­lor news re­lease said the two hos­pi­tals would main­tain sep­a­rate cam­puses. How­ever, Trem­bu­lak said, Geisinger pre­dicts that Re­gional Hos­pi­tal of Scran­ton and Moses Tay­lor Hos­pi­tal will merge, which will re­duce the num­ber of hos­pi­tals in the Scran­ton mar­ket to two.

Com­pet­ing in a Penn­syl­va­nia re­gional mar­ket is not new for Geisinger and CHS. The health sys­tems own hos­pi­tals in Luzerne County. Com­mu­nity Health Sys­tems ac­quired Wy­oming Val­ley Health Care Sys­tem in Wilkes-Barre in 2009, while Geisinger op­er­ates the Geisinger Wy­oming Val­ley Med­i­cal Cen­ter in Wilkes-Barre.

The deal with Com­mu­nity Med­i­cal Cen­ter, Trem­bu­lak said, will pro­vide Geisinger with a “spring­board to the sur­round­ing five or six coun­ties.”

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