New partner signs letter of intent with Chestnut Hill HealthCare, Penn

Chestnut Hill Health Care has announced that it has signed a letter of intent with Brentwood, Tenn.-based Community Health Systems for a proposed joint operating venture with the University of Pennsylvania Health System. The announcement comes less than a month after Vanguard Health Systems pulled out of a similar deal with CHHC and Penn, withdrawing its offer unexpectedly during negotiations with the university and the financially-troubled local healthcare provider.

The letter of intent guarantees the three parties an exclusive period of negotiation, but does not ensure a deal. "There's never really any guarantee until all the documents are signed," Chestnut Hill HealthCare spokeswoman Barbara Wilson recently told the Local. The terms of the letter of intent are confidential.

"We are really pleased that Community Health Systems, who have already worked with Penn, were willing to step up," Wilson said last week.

Chestnut Hill HealthCare, which includes Chestnut Hill Hospital, Chestnut Hill Rehabilitation Hospital and Springfield Residence, lost more than $3.5 million in operations in fiscal 2003. The institution has rebounded somewhat this year, operating at a "break-even point," Wilson reported.

"We have improved the financial position by more than $3 million from last year. We're working really hard on a position for the future, but we're here to stay," she said.

Once definitive agreements are signed, the proposed transaction would be subject to governmental and other approvals, including the Pennsylvania attorney general's office and the Philadelphia County Orphan's Court.

Community Health Systems, a for-profit, publicly traded company, on Oct. 26 reported net operating revenues for its third fiscal quarter of $844.0 million, an 18.4% increase compared to the same period last year. The company owns 72 hospitals in 22 states, including seven hospitals in Pennsylvania.

- James Sturdivant