After sale falls through, Mercy seeks deal with parent of Bangor hospital

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PORTLAND — The proposed sale of Mercy Health System to a for-profit hospital chain is off, but Mercy is now negotiating a new deal with Eastern Maine Healthcare Systems.

Mercy, the nonprofit system that operates 230-bed Mercy Hospital, Portland’s second-largest, had been trying since August to work out terms of an acquisition by Steward Health Care System, a private-equity-backed company that owns 10 Massachusetts hospitals.

But the two systems “were unable to come to a definitive agreement,” according to a Mercy press release on Friday, Dec. 7, and the negotiations were terminated. Both Mercy and Steward refused to discuss why the deal failed.

If the Steward deal had been successful, it would have been the first sale of an acute-care Maine hospital to a for-profit company. If sold to Eastern Maine Healthcare Systems, Mercy would retain its nonprofit status.

A separate press release announced that Mercy had signed a non-binding letter of intent to negotiate with EMHS, the nonprofit parent company of Eastern Maine Medical Center in Bangor. The company also operates six other hospitals and nine nursing homes and retirement communities, all in central and northern Maine.

The agreement “sets the stage for the integration of Mercy into EMHS,” the release said.

Both parties will now conduct a due-diligence review of a potential deal, which would then have to receive approvals from state and federal regulators. It also would need the approval of the Catholic church, with which Mercy is affiliated. The process is expected to take several months.

Mercy is owned by Catholic Health East, a nonprofit system that runs 35 hospitals in 11 states. In October, Catholic Health East announced plans to merge with another system, Trinity Health of Michigan.

William Hall can be reached at 781-3661 ext. 106 or Follow him on Twitter: @hallwilliam4.