Steward Health Care System and Mercy Health System of Portland, Maine, have terminated a letter of intent signed last August under which Boston-based Steward would have bought the financially struggling Catholic hospital group in its first out-of-state acquisition.
In a terse statement issued late Friday afternoon, Steward said it had “entered into a period of exclusive negotiations but (was) unable to come to a definitive agreement” with Mercy Health. “As a result,” Steward said, “the letter of intent is terminated.”
No reason was given for why the non-binding merger agreement had fallen through, and a Steward spokesman, Chris Murphy, would not elaborate on what went wrong. Susan Rouillard, a Mercy Hospital spokeswoman, declined to comment.
Mercy later released a statement saying it entered into a letter of intent to be acquired by Eastern Maine Healthcare Systems in Brewer, Maine.
The collapse of Steward’s marks the third time in the past 18 months it has failed in negotiations to expand its for-profit community hospital and doctors network out of state.
A preliminary offer to buy Jackson Health System in Miami expired last year when the public hospital system, overseen by the Miami-Dade County Commission, let a deadline for responding to Steward’s offer pass without taking action. Earlier this fall, Steward backed out of an agreement to acquire Landmark Medical Center, the Woonsocket, RI, hospital it had been seeking to buy for the past three years, because other health care parties in Rhode Island and the special master who had run the bankrupt hospital failed to meet conditions specified in the asset purchase deal.
Steward has amassed a chain of 10 community hospitals in eastern Massachusetts since it was formed in 2010, but so far has not been able to expand nationally.
“We look at a lot of transactions and we’re very selective about the ones we pursue,” Murphy said Friday. “We only move forward with ones that are a good strategic and economic fit with our model.”
The letter of intent signed with Mercy last summer gave Steward, owned by New York private equity firm Cerberus Capital Management, exclusive rights to negotiate with Mercy’s owner, Catholic Hospital East. The Pennsylvania-based network of 35 hospitals and other health care facilities operates in 11 states from Maine to Florida.
Steward had said it planned to make a “significant investment” in the 94-year-old Mercy system, which includes two Portland hospital campuses as well as a center focusing on addiction medicine, and 11 primary and urgent care sites in and around Portland.