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SSM Health to acquire Saint Louis University Hospital

A view of Saint Louis University Hospital, taken 02/23/15.
Durrie Bouscaren | St. Louis Public Radio
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Saint Louis University Hospital will soon come under the ownership of SSM Health, one of the largest not-for-profit Catholic health care systems in the country.  

The deal is a three-way agreement. SLU Hospital’s current owner, the for-profit Tenet Healthcare Corporation of Texas, will transfer the 356-bed facility to Saint Louis University. They'll take an estimated $150 million (before taxes)  impairment charge, which means it does not reflect what the hospital is worth, a SLU spokesperson said.

In a separate transaction, the school will transfer the hospital to St. Louis-based SSM Health but retain a minority share that includes financial interest and partial governance rights. As a matter of practice, teaching hospitals like SLU employ physicians for the hospitals with which they are affiliated.

The deal is expected to be finalized in about 90 days, pending regulatory approval.

There was no formal bidding process, and SSM officials declined to say how much they would pay to add the facility to their network. Academic health centers like SLU Hospital are often highly coveted by hospital systems, because other hospitals often have to transfer patients there for complicated specialty care and trauma care.

The addition of SLU Hospital will grow SSM’s market share to an estimated 25 percent of the St. Louis region, when measured by inpatient hospital discharges. BJC Healthcare’s market share is about 32 percent, according to Karen Roth, the Director of Research for the St. Louis Area Business Health Coalition.

“It gives [SSM Health] a strategic advantage. I hope it won’t be an uncompetitive advantage, but I don’t think that would happen because they’ve really demonstrated they’re a good value in the St. Louis region,” Roth said.

The region has seen a fair amount of hospital consolidation recently. Health care system say they have more negotiating power with insurers and suppliers when they’re larger, and that can make up for losses in expensive services like emergency rooms. But others say a lack of competition between hospitals in a city makes the cost of healthcare go up.

[From left to right] Paula Friedman, VP of Strategic Development at SSM Health, Bill Thompson, President and CEO of SSM Health, Fred Postello, president of St. Louis University, and Kathy Merlo, Chief Operating Officer of SLUCare Physician Group.
[From left to right] Paula Friedman, VP of Strategic Development at SSM Health, Bill Thompson, president and CEO of SSM Health, Fred Postello, president of St. Louis University, and Kathy Merlo, Chief Operating Officer of SLUCare Physician Group discussed the acquisition with reporters Monday.

SSM Health owns six hospitals in the St. Louis region, including Cardinal Glennon Children’s Medical Center, which is located next to SLU Hospital. 

Kathleen Merlo, chief operating officer for SLU Care Physician Group, said patients shouldn’t notice any changes as the hospital changes hands.

“We’re working very hard to make sure we’re coordinating all the insurance coverage as we’re making this transition. Changes to the building are contemplated, potentially, in the future,” Merlo said.

Tenet Healthcare purchased SLU Hospital in 1998. In 2012, the facility yielded a nearly $51 million loss for Tenet, according to a recent review by the St. Louis Area Business Health Coalition

Tenet annually pays about $856,000 in real estate taxes to the city of St. Louis for the building at 3635 Vista Ave. Nonprofit systems like SSM Health do not pay property taxes, but are expected to provide additional amounts of charity care to people who cannot afford it.

“The current performance of St. Louis University is much better than what was reported in 2012. So the hospital is quite healthy currently. We don’t need to do much to improve its financial health. Our objective here is to better coordinate care to the patients that we serve,” said William Thompson, president and CEO of SSM Health.  

A view of the street near St. Louis University Hospital.
A view of the street near St. Louis University Hospital.

To be a part of a Catholic system like SSM Health, hospitals follow guidelines created by leaders in their church. The document, “Ethical and Religious Directives for Catholic Health Care Services,” forbids some forms of contraception, artificial fertilization and assisted suicide.

But St. Louis University Hospital is affiliated with the Jesuit St. Louis University and it already follows these directives. Officials said there would be no changes under new ownership. 

A previous version of this article said the hospital would be sold to SLU for $150 million. That figure is an impairment charge, and the paragraph has been changed to reflect this. 

For more health-related news, follow Bouscaren on Twitter: @durrieB

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