CHICAGO - St. Louis-based SSM Health Care announced this week it may have found a buyer for a financially struggling 410-bed Chicago-area hospital that was slated to close as soon as this month.

SSM sent a memo to the 2,000 employees of Blue Island, Ill.-based St. Francis Hospital and its related hospice facility announcing a "tentative agreement" with a for-profit investment group, MSMC Investors LLC, as well as an affiliated group, Transition Healthcare. Transition Healthcare, a startup company specializing in financially troubled hospitals, was involved in a previous failed attempt to buy St. Francis last October.

Since that deal fell through, officials at Transition "introduced [the investors] to SSM to try to get a deal done," MSMC spokesman Robert Emmers said. Representatives on all sides refused to disclose financial details and stressed the tentative nature of the deal.

"I want to caution you that this does not mean that any deal has been finalized," wrote SSM chief operating officer Bill Schoenhard in the employee memo. Emmers and an SSM spokesman said they hope to have a final announcement by the middle of next week.

St. Francis has been on the block for more than a year, during which time SSM officials said they met with nearly 30 potential buyers, and even offered to give the hospital away for free. On April 2, SSM said it would close the struggling facility as early as the end of April.

With operating losses of $40 million since 2002, St. Francis had become a key credit concern for SSM, which has nearly $1.1 billion in debt and is one of the largest Catholic health care groups in the country. St. Francis has roughly $40 million in outstanding debt, on which SSM had said it would continue to pay debt service after the closure.

Last year, Illinois regulators rejected SSM's bid to build a sister hospital for St. Francis in a nearby suburb that the system said would offset St. Francis' losses. SSM owns, operates, or is affiliated with 20 acute-care hospitals across four states.

 

Subscribe Now

Independent and authoritative analysis and perspective for the bond buying industry.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.