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Good Samaritan Health System seeks strategic alliance

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The hospital and health system world has been buzzing with acquisitions and alliances in recent years, and The Good Samaritan Health System in Lebanon County has decided to join the trend.

The nonprofit health system, which includes a 172-bed hospital and dates to 1889, announced today that it plans to seek a strategic alliance.

Good Samaritan's debt rating was downgraded by Moody's Investor's Service in December, and in April the health system announced that it was eliminating 50 positions. According to a May report by the Pennsylvania Health Care Cost Containment Council, the hospital's three-year average total margin was the lowest in the five-county region, at -5.02 percent.

"Our primary concern is access to high quality healthcare services for our community," Dr. John P. Welch, chairman of the hospital's board, said in a news release. "Good Samaritan's board of trustees is seeking an alliance partner that has a similar commitment to mission, vision, high quality healthcare, patient safety and growth."

Welch said potential partners will be invited to offer ideas about different alliance options. Good Samaritan is not requiring any particular business model, he said, but successful options must fit the needs of Good Samaritan and the community.

"Good Samaritan has invested in many services, such as cardiothoracic care and wound care, that have given our community high-quality health services close to home," Good Samaritan President and CEO Robert J. Longo said. "In recent years, we have focused on recruiting key physicians for cardiac, digestive health, general surgery, vascular, and other specialty areas. We have been successful to date, and we believe an alliance partner will help Good Samaritan to continue to meet community health needs in what is likely to be an increasingly challenging economic and regulatory environment."

The selection of an alliance partner is expected to take several months to complete, and as a first step, the health system will contact potential partners to gauge their interest in forming an alliance.

"Good Samaritan anticipates receiving a number of positive responses due to the system's location, patient base, comparatively low cost structure, and its strong patient care quality and safety profile," the release said. "Assuming that a suitable alliance partner is found, the board of trustees will announce the selection of the alliance partner candidate later in the year. This announcement would be followed by additional months of detailed discussions before a final agreement is reached. All discussions with potential partners will remain confidential until an alliance partner is selected."

Good Samaritan cited rapid transformation in health care as a factor in the decision, saying it requires significant investments in equipment, information technology and specialized personnel even as government and private insurers are restricting payments to health care providers. Health reform initiatives are moving patient care away from the traditional inpatient hospital setting to more outpatient and less costly venues, and health reform efforts will also require health systems to better manage population health and chronic diseases while assuming the financial risk for providing patient care.

Good Samaritan said Lebanon County residents select its hospital more than any other in the region, noting that the hospital delivered more than $20 million in charitable and uncompensated care during fiscal year 2012. As an organization, Good Samaritan is also the largest non-government employer in the county, provides many free health screenings and sponsors many community organizations, the release said.

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