Lourdes Health System to join Cooper University Health Care
Cooper will acquire Lourdes, which has hospitals in Camden and Willingboro, and St. Francis Medical Center in Trenton from Trinity Health, under a preliminary deal announced Thursday.
Cooper University Health System will acquire Lourdes Health System, with hospitals in Camden and Willingboro, and St. Francis Medical Center in Trenton from Trinity Health, under a preliminary deal announced Thursday.
The letter of intent with Cooper comes after a year of talks between Trinity, a large Catholic health system based in Livonia, Mich., and potential acquirers.
If the deal is completed, Camden-based Cooper said, it will have combined revenue of almost $2 billion, based on 2016 results, operating four hospitals that employ more than 12,000 people and managing 1,382 licensed beds.
"In today's health-care environment in New Jersey, continuing success for Lourdes and St. Francis depends on being part of a growing regional network with a strong presence in local communities," Ben Carter, executive vice president of Trinity, said in a news release.
"This agreement will bring together health-care providers from across south and central New Jersey, allowing us to dramatically expand access to the high quality of care for thousands of new patients," George E. Norcross III, chairman of the board of trustees of Cooper University Health Care, said in Cooper's release.
The systems now will work toward a definitive agreement, which can take months. The deal is subject to state and federal regulatory approval.
No financial terms were disclosed. Typically when a nonprofit buys another nonprofit, no money is exchanged, though the acquirer assumes debt. Trinity's financials attributed $211 million in debt to Lourdes and $80 million to St. Francis as of June 30, 2016. Cooper will invest more than $135 million in the Lourdes and St. Francis campuses.
"That's not a lot," considering it's probably a multiyear commitment split among three hospitals, said Dan Grauman, chief executive of Veralon, a Philadelphia health-care consulting firm.
Still, it is a positive deal, Grauman said: "It will help rationalize health care in Camden. Cooper can figure out what it makes sense to use the various locations for, run it more efficiently, presumably reduce some overhead."
Neither side would discuss the difficult issue of abortion.
"Since we just signed the [letter of intent], it probably is too premature to get into that level of detail," said Lourdes spokeswoman Carol Lynn Daly. Two representatives of the founding Franciscan Sisters of Allegany, in Allegany, N.Y., are on the board of Lourdes, which does not offer abortions.
A proposed merger in 2012 between Abington Health and the Catholic Holy Redeemer Health System fell apart because of a conflict over abortion services. As part of the tentative deal, Abington had agreed to stop offering the services, prompting community protest that led to the merger's cancellation.
The planned acquisitions come as Cooper has been surging financially. In the last two years, it has had the strongest revenue growth of the four major health systems in South Jersey. The others are Virtua, Inspira, and Kennedy, which is being acquired by Jefferson. Cooper's operating profit margin of 4.7 percent last year topped Virtua's and Kennedy's for the first time in at least eight years.
Cooper's total revenue last year was $1.17 billion, up from $777.4 million five years ago, when it scraped by with operating income of $700,000. In each of the last two years, operating income has topped $50 million.
By contrast, results have been mixed at Lourdes, which operates on a fiscal year ending June 30. The system had small operating losses in two of the three fiscal years ended June 30, 2016. Lourdes had $555 million in revenue in fiscal 2016. Results for fiscal 2017 have not been published.
Trinity entered the Philadelphia market in 2013, when it took over the former Catholic Health East, based in Newtown Square. Other Trinity operations are Conshohocken-based Mercy Health System of Southeastern Pennsylvania and St. Mary Medical Center in Langhorne.