Mercy Suburban Hospital sold to Prime Healthcare

Mercy Health System has agreed to sell Mercy Suburban Hospital in Montgomery County to Prime Healthcare Services Inc., a California-based for-profit company that owns Roxborough Memorial Hospital in Philadelphia and Lower Bucks Hospital in Bristol Township.

Mercy, part of one of the nation's largest tax-exempt health systems, Trinity Health, of Livonia, Mich., and Prime did not disclose the value of the deal, announced Monday.

Trinity said the 126-bed hospital in East Norriton lost $5.4 million on $54.6 million in revenue in the six months ended Dec. 31.

An expert in health-care finance who is familiar with Prime estimated that the Ontario, Calif., company would value a place like Mercy Suburban at 25 percent to 40 percent of annual revenue.

That would equal about $25 million to $40 million, said Joshua A. Nemzoff, president of Nemzoff & Co., in New Hope, a mergers and acquisitions adviser to nonprofit health-care organizations.

Mercy Suburban has 680 employees.

Prime officials could not be reached for comment on the deal, which requires regulatory approval and is expected to close in four to six months.

Prime has agreed to invest $30 million in Mercy Suburban in the five years after completion of the deal, the organizations said in a joint statement.

A lack of investment at the facility has been evident for some time, said Bill Cruice, executive director of the Pennsylvania Association of Staff Nurses and Allied Professionals, a union that represents 155 nurses there.

"They have not been nearly as aggressive in recruiting physicians or maintaining capital plant and capital equipment for four years now," Cruice said. "We've been concerned about that for some time."

Trinity, and before that Catholic Healthcare East, which merged with Trinity in 2013, has sold or has agreed to sell five of its financially weakest hospitals in recent years.

Mercy Suburban is Trinity's third deal with Prime.

As part of the deal with Prime, Mercy Suburban will lose its Catholic identity and change its name. Prime has agreed to maintain charity care that is "no less favorable" than the current policy.

Mercy Suburban was founded in 1944 as Riverview Hospital in Norristown and moved to its current site in 1972.


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