Board signs letter of intent for acquisition of West Central Pennsylvania’s largest health system; Duke LifePoint commits to invest more than half a billion dollars over next decade to strengthen and grow the system
For updated information throughout this transition, visit www.ConemaughUpdate.org
The board of directors of Conemaugh Health System has selected Duke LifePoint Healthcare as its partner to position West Central Pennsylvania’s largest health system to thrive in the coming decades, officials announced today.
Founded in 2011, Duke LifePoint, a national leader with an excellent reputation for quality care, education, operations excellence and financial strength, is an innovative joint venture of Duke University Health System and LifePoint Hospitals. The board and Duke LifePoint have signed a letter of intent under which Duke LifePoint will acquire the health system. Under the terms of the letter of intent, Duke LifePoint has agreed to invest more than half a billion dollars over the next ten years to strengthen and grow Conemaugh Health System.
“Today’s announcement marks a banner day for our community,” said Ron Vickroy, chairman of the Conemaugh Health System board of directors. “Through a thoughtful, deliberate exploration process, our board’s goal was to find a partner that would strengthen quality and access to care, as well as bring substantial investment and resources to our community. We believe that Duke LifePoint is the perfect fit, and we are thrilled to move forward together.”
Duke LifePoint’s acquisition will include Conemaugh Health System’s three hospitals, outpatient centers and Conemaugh Physician Group practices.
“We’re honored to be selected as Conemaugh’s health care partner,” said William F. Carpenter III, chairman and chief executive officer of LifePoint Hospitals. “Conemaugh is an excellent health system with an unwavering commitment to its patients, employees and physicians. We look forward to exploring this potential partnership and working with Conemaugh to further strengthen and advance health care throughout this region.”
With a desire to advance health care in the region and remain strong for generations to come, Conemaugh’s board spent many months evaluating the system’s strengths, unique qualities, vision for the future and role as an economic engine in the West Central Pennsylvania region. Ultimately, the board decided that the organization could be stronger if it partnered with a like-minded organization.
The strategic planning process, in part, came in response to the challenges health care systems across the country face, including increasing capital needs, reimbursement cuts and changing patient volumes, as well as a desire to position Conemaugh for population health management in this new era of health care. Given these factors, Conemaugh’s board recognized that the time is now to evolve and ensure the long-term success of the health system.
“By doing this now – while we are financially strong – we are taking our future into our own hands and creating a stronger health system for our region,” Vickroy said. “Our board and leadership have worked hard to determine what the ideal future looks like for us and for health care in our region. We have evaluated our choices from a position of strength, and believe our relationship with Duke LifePoint will only accelerate what we hope to achieve.”
The Conemaugh board worked with health care-specialized investment banking firm Juniper Advisory to review several possible health system affiliates. The board evaluated these organizations against a lengthy set of criteria, including their ability to expand clinical services, grow educational efforts, invest in the West Central Pennsylvania region, and make sure that patients in the area have access to excellent, affordable care for years to come.
“We were impressed by the interest in our organization and in our community by sophisticated, highly respected organizations that truly marveled at what we’ve created here at Conemaugh” said Scott A. Becker, chief executive officer of Conemaugh Health System. “This is a significant tribute to our employees, physicians and our board. This partnership marks a new era of health care for our region, and we could not be more excited about the future.”
Duke LifePoint was formed with the vision of building a strong network of community hospitals and regional medical centers that will be strengthened through enhanced quality and safety programs and operational excellence. The company draws on Duke University Health System’s top-ranked patient safety, quality and education programs and LifePoint’s financial and operational resources and expertise. Conemaugh will be the largest health care system in Duke LifePoint’s network of health systems.
“Conemaugh Health System is a strong clinical organization and will be a wonderful addition to Duke LifePoint,” said William J. Fulkerson Jr., M.D., executive vice president of Duke University Health System. “We look forward to the opportunity to work together to transform health care delivery in Johnstown and the greater West Central Pennsylvania region.”
Both systems will now begin a process to conduct additional due diligence and negotiate the terms of a definitive agreement. While the parties will be negotiating the specific terms, there is an understanding that the definitive agreement will include the following commitments:
• Commitment to quality: A leading goal of this partnership is to further enhance the quality of care Conemaugh provides. Conemaugh will participate in the Duke LifePoint Quality Program, which will link Conemaugh’s hospitals to Duke LifePoint’s quality and patient safety initiatives.
• Employees: Duke LifePoint will commit to hire all active employees of Conemaugh in good standing when the transaction closes.
• Governance: Conemaugh will maintain a local board, which will include local community members, physicians from the active medical staff, the CEO and a representative from Duke.
• Services: Duke LifePoint and Conemaugh will maintain and, if needed, expand the type and scope of existing clinical services available for the region.
• Information technology integration: Duke LifePoint will commit to further developing Conemaugh’s information system and related technology infrastructure.
• Graduate education: Duke LifePoint will commit to helping develop and expand graduate residency, nursing and allied health programs at Conemaugh.
• Maintaining charity care: Duke LifePoint will assume Conemaugh’s charity-care policy when the acquisition is completed.
• Financial impact: Duke LifePoint will invest more than half a billion dollars over ten years to fund outpatient and inpatient care facilities, technology, equipment and physician recruitment. This includes investments within the next two years to build outpatient centers in Richland and Ebensburg and a medical education conference center, and to enhance the system’s informational technology platform.
• Regional economic benefits: As a for-profit system, Duke LifePoint’s relationship with Conemaugh will bring much-needed tax revenue to the community. The partnership is also expected to launch investments in construction projects, bringing the potential for additional construction jobs to the community.
“Like Conemaugh, Duke LifePoint has an excellent reputation for clinical quality and safety and is dedicated to educating the next generation of medical professionals,” said William Carney, M.D., general surgeon and chief medical officer of Conemaugh Physician Group. “This partnership is great news for our patients, our medical staff, employees and the West Central Pennsylvania region.”
Pending review by state authorities and subject to customary closing conditions, the transaction is expected to close in the fall of 2014. A special website has been developed for information about this partnership: www.conemaughupdate.org.
About Conemaugh Health System
Conemaugh Health System is the largest healthcare provider in west central Pennsylvania, serving over a half-million patients each year through the Conemaugh Physician Group and Medical Staff, a network of hospitals, specialty clinics and patient focused programs. Conemaugh’s 4,500+ employees and 350+ physicians are committed to excellence and repeatedly earn state and national recognition for exceptional clinical outcomes. Conemaugh Memorial Medical Center, the system’s flagship hospital, provides sophisticated technology, the highest levels of trauma and neonatal intensive care and a committed history of training tomorrow’s physician, nurses and allied health providers. For more information on Conemaugh, visit us at www.conemaugh.org or follow us on Facebook.
About Duke LifePoint
Duke LifePoint Healthcare, a joint venture of Duke University Health System, Inc. and LifePoint Hospitals® (NASDAQ: LPNT), was established to build a dynamic network of hospitals and health care providers. The joint venture, which brings together LifePoint's experience in community-based hospital management and Duke's world-renowned leadership in clinical service, is strengthening and improving health care delivery by providing community hospitals the clinical, quality and operational resources they need to grow and prosper. For additional information, visit www.dukelifepointhealthcare.com.
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