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ST. LOUIS – The nation’s largest Catholic health system is partnering with a private equity firm on a joint venture to buy Catholic hospitals and other providers.
Ascension Health, a St. Louis-based health system operating 69 acute care hospitals in 20 states, is forming the Ascension Health Care Network with Oak Hill Capital Partners, a Stamford, Conn.-based private equity firm with $8.2 billion of committed capital.
The financial terms of the transaction were not revealed.
According to Charles Patton, a partner at Oak Hill Capital, the joint venture will provide an alternative funding source for the acquisition of Catholic healthcare entities. He said AHCN could offer targeted organizations access to financial, operational and clinical resources.
“Ascension Health is the nation’s third largest healthcare system, with an established record of providing high standards of care,” Patton said. “We are enthusiastic about this partnership.”
Leo P. Brideau, the former president and CEO of Columbia St. Mary’s health system in Milwaukee, will serve as president and CEO of the new venture. Brideau also served as the Wisconsin/Missouri Ministry Market Leader for Ascension Health.
In a recent interview with the Milwaukee Journal-Sentinel, Brideau said the core issue facing many Catholic hospitals is “how they sustain themselves.” He indicated the joint venture would allow acquired facilities to retain their Catholic identities “into perpetuity.”
Oak Hill Capital will provide most of the initial capital for the joint venture, but Ascension will also provide investment capital through Ascension Health Ventures, its venture capital unit. Ascension Health established the unit in 2001 with a commitment of $125 million to invest in expansion- to late-stage healthcare companies.
Anthony R. Tersigni, president and CEO of Ascension Health, said the joint venture would allow struggling Catholic hospitals an “innovative solution to move forward with the resources and expertise they need to survive and thrive.”
“Hospitals across the country are facing many difficulties in the current economic climate – including evolving clinical requirements and the need to keep pace with technological innovations,” he said. “These challenges ring true for many Catholic hospitals.”
The joint venture has a strong financial underpinning. In addition to Oak Hill’s capital reserves, Ascension had operating revenue of $14.8 billion in its fiscal year ending June 30.
Sister Maureen McGuire, the senior vice president of mission integration for Ascension Health, said AHCN would serve as an innovative alternative funding source for Catholic providers.
“We are fortunate to have experience in coupling efficient operations with outstanding clinical outcomes in person-centered care and can share a unique blend of experts, resources and best practices with other hospitals,” she said, noting a recent Thomson Reuters study indicating that people receive higher quality care at Catholic hospitals.