Dive Overview:
Ascension is selling its stake in Alabama-based five-hospital Ascension St. Vincent Health System to The University of Alabama Health System for about $450 million, the University of Alabama Health System announced Tuesday. The transaction, which is expected to close later this year pending regulatory approval, will include the system’s hospitals, clinical facilities, employees and freestanding emergency department. The St. Louis-based system has seen a flurry of M&A activity in recent months, and the sale is the latest.
Dive Insights:
Ascension and UAB have been working together since early 2020 through a strategic partnership.
UAB, which operates a network of 17 hospitals with more than 2,600 licensed beds, said the deal is a “natural step” toward sustainable expansion of health care in Alabama.
The University of Alabama System’s Board of Trustees unanimously approved the purchase agreement during a special meeting called to consider the transaction, according to a press release.
Ascension representatives acknowledged macroeconomic headwinds when discussing the deal.
“As part of our shared commitment to our patients, caregivers, employees and communities, we continue to discuss options to better fulfill our mission in an increasingly complex environment,” Jason Alexander, CEO of Ascension St. Vincent and senior vice president of Ascension, said in a statement.
The health system faces big financial losses in 2022 and 2023, and Fitch and S&P Global Ratings downgraded the nonprofit’s outlook to negative last fall.
While Ascension has made some financial progress thanks to lower labor costs, its outlook for this year remains bleak.
The nonprofit has been on an active sales spree lately, from hospitals to ancillary services.
The Catholic health system recently announced it was selling three Michigan-based hospitals and entering into a separate deal to transfer operations of Ascension Via Christi Hospital in Pittsburgh, Kansas, to the Mercy health system.
In February, the company completed a deal to sell Our Lady of Lourdes Memorial Hospital in Binghamton, New York, to Guthrie Clinic.
Ascension also announced plans this spring to outsource its Illinois-based hospital care operations and last year sold a stake in Wisconsin insurer Network Health.
The system is also separately dealing with the fallout from a cyberattack that affected operations at facilities across the country this spring, which Fitch said is not expected to have a long-term impact on Ascension’s financial recovery.