Stan­ford Hospi­tal, Val­leyCare sign let­ter to merge

Modern Healthcare - - REGIONAL NEWS - —Bob Her­man

Stan­ford Hospi­tal & Clin­ics and Val­leyCare Health Sys­tem have signed a non­bind­ing let­ter of in­tent to merge, mark­ing Stan­ford’s first foray into the com­mu­nity hospi­tal M&A scene.

Val­leyCare, a two-cam­pus hospi­tal sys­tem based in Pleasan­ton, Calif., is ap­prox­i­mately 30 miles north­east of Palo Alto, Calif.-based Stan­ford. Val­leyCare has recorded op­er­at­ing losses the past few years—Val­leyCare CEO Scott Gregerson said the sys­tem lost $5.1 mil­lion from op­er­a­tions on $280 mil­lion of rev­enue in fis­cal 2013 alone. Stan­ford, mean­while, recorded $252.8 mil­lion in op­er­at­ing in­come on $2.7 bil­lion of rev­enue in 2013.

“It’s a chal­leng­ing time for hos­pi­tals of our size. We’re a mid­size com­mu­nity hospi­tal, truly in­de­pen­dent,” Gregerson said. “We want to be able to meet the needs of this com­mu­nity go­ing for­ward, and that is a very heavy lift. There’s a lot of in­vest­ment that needs to be done.” The in­vest­ment, Gregerson said, is most needed in two ar­eas: elec­tronic health records and physi­cian align­ment. Af­fil­i­at­ing with Stan­ford can solve those is­sues, he said.

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