CHS, Cleveland Clinic strike deal for Ohio hospital system

Akron network rang up '11 revenues of $560M+

The partnership between Community Health Systems and the Cleveland Clinic has yielded a first foray into the buzzing hospital M&A market with a tentative agreement to take over a north Ohio hospital network.

Officials from Franklin-based CHS and the Cleveland Clinic have signed a deal with their peers at Akron General Health System to enter into exclusive talks to buy some of the latter's assets. Those include the 532-bed Akron General Medical Center, a 70-bed rehabilitation hospital north of Akron and a 25-bed critical access hospital about 30 miles west of the city. The system rang up 2011 revenues of $563 million.

The CHS-Cleveland Clinic collaboration was launched early this year to focus on clinical and operational improvements. While both sides were open to expanding their partnership, banding together to buy other provider systems was not in the cards early on. But Wayne Smith, CHS president and CEO, in May said the two organizations had been contacted by several hospital leaders looking to sell to a group that combines corporate resources and academic know-how.

“The strategic alliance formed between Cleveland Clinic and Community Health Systems earlier this year is gaining momentum as we work together to advance high-quality, cost-effective healthcare services within our own organizations,” Smith said late Thursday. “Our relationship also has garnered interest from other organizations that recognize a unique opportunity to benefit from the compelling collaboration between two healthcare providers that bring together clinical expertise, capital resources, operational experience and innovation.”

Shares of CHS (Ticker: CYH) closed Thursday trading up almost 1 percent to $41.35. So far this year, they're up about 35 percent.