Reading Health to buy five SE Pa. hospitals

Reading Health System has agreed to buy five community hospitals in Southeastern Pennsylvania from Community Health Systems Inc. for an undisclosed price, the two parties announced Tuesday.

The hospitals included in the deal, which is expected to close this summer, are: the 169-bed Brandywine Hospital in Coatesville, the 148-bed Chestnut Hill Hospital in Philadelphia, the 63-bed Jennersville Hospital in West Grove, the 151-bed Phoenixville Hospital in Phoenixville, and the 232-bed Pottstown Memorial Medical Center in Pottstown.

In aggregate, the five hospitals had $585 million in operating revenue and a very thin operating margin of $1.4 million in the year ended June 30, 2016, according the Pennsylvania Health Care Cost Containment Council.

The deal represents a significant expansion for Reading, which is anchored by a 695-bed acute-care hospital in West Reading. The nonprofit health system had $978.5 million in revenue and a narrow operating margin of $12.2 million in the year ended June 30, 2016. Reading Health has more than 700 beds in all, including 50 beds in a nursing home, which means the Community Health acquisition will more than double Reading's size in terms of beds.

The acquisition also potentially opens the door to further expansion by Pittsburgh-based health care giant UPMC in Southeastern Pennsylvania. Reading Health and UPMC Health Plan have a joint venture to offer health coverage and related services to individuals as well as employers and their employees in the Reading Health System service area. UPMC already offers Medicare Advantage plans in Southeastern Pennsylvania and has been picked to provide managed Medicaid services in the region starting next year.

Community Health Systems, based in Franklin, Tenn., has been on a selling spree in a bid to pay off debt and improve profitability. In the Philadelphia region, it previously agreed to sell the Memorial Hospital of Salem County to the Prime Healthcare Foundation for $15 million.