Manchester-based Eastern Connecticut Health Network has signed a nonbinding letter of intent to merge with Nashville, Tenn.-based Vanguard Health Systems and Yale New Haven (Conn.) Health System.
Under the agreement, a joint venture between Vanguard and Yale would purchase the assets of ECHN, making ECHN a for-profit organization. Terms of the deal were not disclosed. Vanguard would hold the majority stake, and it would operate and manage ECHN's two hospitals — 249-bed Manchester (Conn.) Memorial Hospital and 102-bed Rockville General Hospital in Vernon — as well as ECHN's other facilities. Yale and its other hospitals would still be part of its own health system, but it would be minority owner of ECHN and would provide the clinical, quality and service line management.
Vanguard, Yale and ECHN will now undergo due diligence over the next several months before signing a definitive agreement. Executives said the potential joint venture would still need approval from the Connecticut Department of Public Health, the Office of the Attorney General and other regulatory bodies. Full approval of the deal could take between 12 and 18 months.
ECHN's board has been looking for a partner for the past 18 months, and whispers that a for-profit hospital chain would buy the system emerged in June.
Vanguard, which recently agreed to merge with Dallas-based Tenet Healthcare Corp. in a deal valued at $4.3 billion, has been active in the Connecticut hospital market. Although the state only has one for-profit hospital, Vanguard is currently working on transactions with Greater Waterbury (Conn.) Health Network and Bristol (Conn.) Hospital.
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