Dive Brief:
- Ascension continues to shrink its footprint in the Midwest, announcing Thursday that it has signed a definitive agreement to sell nine Illinois hospitals and four care sites to Prime Healthcare.
- The deal, which is expected to close in the first quarter of 2025, will be Prime Healthcare’s largest acquisition and its first entry into the Illinois market.
- Prime has committed to investing $250 million into the 13 properties and says “no debt will be put on the hospitals to complete this transaction.” Other financial terms were not disclosed.
Dive Insight:
The deal marks the latest in the string of Midwest divestitures for Ascension.
The Catholic health system had a challenging fiscal 2023, when it battled increased expenses and posted a net loss of $2.7 billion. During the first quarter, the system’s outlook improved as the pace of expense growth slowed.
However, management said Ascension planned to shift its focus from hospital services to ambulatory care and telehealth — service lines that typically come with lower overhead costs.
As Ascension shifts focus, it’s tightening its hospital portfolio across the country, offloading hospitals in markets ranging from Kansas to New York.
In the Midwest, the system divested three Michigan hospitals and an ambulatory surgical center for an undisclosed figure in March. Last October, Ascension inked a joint venture deal with Henry Ford Health to combine into a $10.5 billion system, rebranding eight of Ascension’s Michigan acute care hospitals to operate under the Henry Ford name.
Prime is set to acquire Ascension Holy Family, Ascension Mercy, Ascension Saint Francis, Ascension Saint Joseph hospitals in Joliet and Elgin, Ascension Resurrection, Ascension Saint Mary in Kankakee and Chicago, and Ascension Saint Elizabeth.
The Prime deal will roughly halve Ascension’s Illinois hospital portfolio, leaving the health system with 12 hospitals and care facilities in the state, according to a company spokesperson.
Ascension suffered a cyberattack earlier this year, however, the event likely is unrelated to current divestitures. Analysts from credit rating agency Fitch Ratings characterized the health system as having “very strong liquidity” and a leverage position that provides “significant cushion” for one-off events, such as cyberattacks.
Meanwhile, Prime has sought to expand. Earlier this year, it purchased five hospitals from Medical Properties Trust for $350 million.
The health system currently operates 44 hospitals and 300 outpatient sites across 14 states, and a spokesperson said the company has been looking to enter the Illinois market.
Prime said it has a reputation for “its unique ability to transform financially struggling hospitals” and plans to offer employment to “substantially all associates” upon the deal closing.
