Dive Brief:
- Virtua Health has signed an agreement to buy Lourdes Health System, a Trinity Health entity with two hospitals and two physician practices in New Jersey.
- The deal now awaits federal, state and regulatory approval. Last year, an attempted acquisition of Lourdes by Camden-based Cooper Health System fell through during due diligence when Cooper discovered Lourdes was potentially liable for more than $20 million in unresolved litigation.
- Maxis Health System, the Trinity property that owns Lourdes, was sued by Cooper after the deal fell through, and is currently looking to sell a third hospital in New Jersey. Maxis and Cooper began mediation in January.
Dive Insight:
Trinity, the nation's second-largest Catholic health system, said it expects to record a loss of between $75 million and $100 million on the sale of Lourdes. As for Virtua, the Lourdes acquisition would round out the health system's hospital count at five for a total of about 1,500 beds and $1.8 billion in revenue. In a statement, Virtua said the combined organization plans to offer tertiary and community care through an integrated network.
Cooper raised eyebrows late last year when it filed its $15 million suit against Trinity's Maxis Health System division after walking away from its deal to acquire Lourdes and St. Francis Medical Center, also in New Jersey. The move was an about-face in an industry where organizations have been diving head first into consolidation.
As healthcare M&A activity continues to surge, health systems seek to mitigate some of the downsides of consolidation, including debt, higher cost of care and challenges to patient safety.
That's the strategy Trinity is trying across the river, in Philadelphia. Mercy Health System of Southeastern Pennsylvania and St. Mary Medical Center, two Trinity entities, recently inked a partnership with Penn Medicine that will focus on addressing population health across the Greater Philadelphia region. The alliance is also looking to develop joint clinical care programs for cancer care, cardiology and surgical services.
Trinity could benefit from recent state legislation in New Jersey that reinstates the Affordable Care Act's individual mandate. Last month, Gov. Phil Murphy signed a bill that requires all New Jersey residents to have health coverage or pay a penalty, making New Jersey the second state in the country to enact an individual health insurance mandate, following Massachussetts. That mandate will take effect on January 2019, when the federal mandate penalty is set to zero out.