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Board recommends buyer for St. Joseph

After a whirlwind series of meetings and fact-finding sessions, the board of directors at St. Joseph Medical Center has identified and recommended a buyer for the beleaguered hospital to Catholic Health Initiatives, the current owner.

The 263-bed community hospital in Towson has been under scrutiny for nearly three years after hundreds of patients of its lead cardiologist, Dr. Mark Midei, claimed they received heart stents during surgeries they did not need.

Three potential buyers — the University of Maryland Medical System; LifeBridge Health, which owns Sinai and Northwest hospitals; and St. Agnes Hospital — have been studying St. Joseph’s books for the last two months.

A source estimated the cost of taking over the medical center could be up to $300 million.

A buyer is expected to be named in a matter of days, a source with knowledge of the negotiations said Tuesday.

Edward Gilliss, a Towson attorney and chairman of the St. Joseph hospital board, declined comment in a brief interview Tuesday.

“The board’s actions are confidential,” Gilliss said. “We’re not able to tell you what we’re doing or when we’re doing it.”

In a statement issued Tuesday afternoon, Kellie Taylor, marketing manager at St. Joseph, said the hospital’s board had decided to sell the facility. Earlier statements from the board had focused on forming a “strategic partnership” with another medical center.

“The St. Joseph Medical Center Board of Directors and Catholic Health Initiatives have decided to seek a new owner for the medical center to better meet the demands and needs of the communities served by SJMC,” the statement said.

“The decision follows a year-long evaluation of strategic alternatives and discussions in recent months with Catholic and other not-for-profit health care organizations that expressed interest in St. Joseph. Three finalists were selected for additional consideration. Last night, the SJMC board voted to forward its recommendation to CHI for a decision by the CHI Board of Stewardship Trustees. We will make an announcement when a decision has been made.”

St. Joseph has been plagued with controversy since 2009 after former patients of Midei claimed they received unnecessary cardiac stents during surgery.

In the wake of that controversy, the hospital’s admissions and revenue fell. Recently 17 employees were laid off.

The hospital also agreed to pay a $22 million settlement last November. Federal officials said that over a decade, the hospital had paid illegal kickbacks to a group co-founded by Midei, MidAtlantic Cardiovascular Associates, and separately billed federal benefit programs for the medically unnecessary stents.

Midei resigned and his medical license was revoked by the state Board of Physicians. He is presently suing St. Joseph Medical Center for $60 million.

The statement said the hospital’s board has received a pledge from the prospective owners to “honor the Catholic identity and religious heritage” of St. Joseph. The selection of a new owner will require approval from Denver-based Catholic Health Initiatives, federal, state and church officials, the statement said.

“As health care reform continues to evolve, it will be critical for health providers to be part of a regional network of coordinated health care organizations including hospitals, physicians, payers and other related health entities in geographically proximate areas,” the statement said.

The hospital, founded in 1864 by the Sisters of St. Francis of Philadelphia, was first called St. Joseph German Hospital.  It moved to its current location in 1965.