Ochsner Health System said Tuesday that it has reached an agreement to acquire River Parishes Hospital in St. John the Baptist Parish, with plans to turn the underused 80-bed acute-care hospital into an outpatient clinic providing emergency and primary care services until a new facility is built in coming years.
The agreement, which is expected to be completed in November, will likely result in layoffs of about 90 of the hospital’s 150 full-time employees, said David Gaines, vice president of public affairs for Ochsner Health System.
The LaPlace facility will stay open as Ochsner builds a new facility elsewhere in St. John, which will provide emergency, primary care, laboratory and radiology services, he said. That could take two years, he said.
Officials with both Ochsner and LifePoint Hospitals, which owns River Parishes Hospital, declined to disclose financial terms of the deal.
“We’re in a transition phase beginning today,” said Diane Huggins, a LifePoint spokeswoman. “With this announcement, the facility is going to transition to an outpatient medical facility, so we’re in the process right now of working with employees to determine who might be impacted.”
Some laid-off employees may be offered jobs at other Ochsner or LifePoint facilities. If not, they will be offered severance packages and employment assistance, she said.
About 60 percent of the hospital’s staff are expected to be cut as the facility ends its inpatient services, Gaines said. “I don’t know the exact number of jobs yet,” he said. “But a smaller facility is fewer jobs. There’s no two ways about that.”
Talks to acquire the LaPlace facility have been going on for 18 months, he said. The 80-bed hospital now averages only about 12 patients per night, he said, which “makes it challenging” to keep afloat.
“One of the things they pointed out was the concern about the sustainability of the inpatient model there,” he said.
Tuesday’s announcement marks the latest deal for Ochsner, which announced earlier this year that it would begin providing management services at the publicly owned St. Charles Parish Hospital, where it already was providing primary and specialty care services. Under that arrangement, the 59-bed Luling facility is still owned by the local St. Charles Hospital Service District.
That hospital’s CEO, Federico Martinez Jr., told St. Charles Parish Council members in June that partnering with a larger health system is part of an industry trend and ultimately would allow him to expand services and reduce patient costs.
“Look across the country and see what’s happening in health care,” he said. “If you don’t believe today is the right day to enter into a partnership with the larger system to help this hospital address the future, then you really haven’t kept up with health care.”
Ochsner also was in the running to operate Jefferson Parish’s two public hospitals, though it later pulled out of that competition.
After that fell through, Ochsner signed a letter of intent to form a “strategic partnership” with St. Tammany Parish Hospital in Covington. Gaines described that agreement — expected to close in the next 60 days — as “an excellent example of where we think we can partner with other hospitals without having to acquire them.”
In January, the New England Journal of Medicine reported that rising costs tied in part to the implementation of the federal Affordable Care Act had sparked a wave of mergers in the health care industry, including 105 deals in 2012, up by nearly half from levels in the mid-2000s.
“This activity could have lasting repercussions for consumers; the last hospital-merger wave (in the 1990s) led to substantial price increases with little or no countervailing benefit,” the journal article said. “Since the primary driver of growth in private spending in recent years has been price increases for health care services, a compelling argument can be made for putting the brakes on consolidation. But, unless new public and private initiatives are developed to discourage consolidation and to support enforcement of antitrust law, most of these deals will proceed unchallenged.”
The nonprofit Ochsner Health System had $139.5 million in revenue in 2012, according to recent tax forms.
Follow Richard Thompson on Twitter, @rthompsonMSY.