Monday, December 5, 2011 2:59 pm

Nashville, Tenn. (December 5, 2011) – Capella Healthcare and Saint Thomas Health have signed a Letter of Intent (LOI) to create an innovative venture that will improve healthcare throughout Middle Tennessee and Southern Kentucky, officials announced today.

Based in Nashville, Saint Thomas Health includes five hospitals affiliated with Ascension Health Ministry, the largest Catholic system and the largest non-profit in the United States. Capella Healthcare, based in Franklin, operates 15 hospitals in seven states, including five in Tennessee.

The pending partnership will result in the joint ownership and operation of Capella’s four Middle Tennessee hospitals and potentially additional healthcare facilities in a 60-county area of Middle Tennessee and Southern Kentucky.

Capella hospitals included in the joint venture are River Park Hospital in McMinnville, White County Community Hospital in Sparta, DeKalb Community Hospital in Smithville and Stones River Hospital in Woodbury, all in Tennessee. These hospitals will operate as part of the Saint Thomas Health Network, which will hold an equity interest. In addition, Saint Thomas Health will become the tertiary care partner for the hospitals within the new venture.

“This is a landmark partnership for us and the communities we serve,” said Mike Schatzlein, M.D. Saint Thomas Health president and chief executive officer. “We are partnering with Capella Healthcare and the outstanding physicians in the communities of their Middle Tennessee hospitals to expand and enhance services in the communities they serve. We look forward to providing support for the expansion of cardiac, neurosciences and other specialty services, as well as collaborate on strategies for the use of innovative technology and clinical integration.”

Capella will be the managing member and the majority partner in the new venture, and under the agreement, Capella will be the exclusive development partner for Saint Thomas Health across Middle Tennessee and Southern Kentucky.

Capella Healthcare CEO Dan Slipkovich stated, “Partnering with Saint Thomas Health, which is nationally recognized for its quality of care and innovative strategy, positions our Middle Tennessee hospitals for greater success as we seek to further expand services. This venture also provides a significant opportunity for Capella and Saint Thomas Health to jointly partner with additional hospitals that recognize the value of these kinds of partnerships, especially as accountable care and health reform continue to evolve. Our two organizations share a commitment to providing the highest quality of care for the individuals and communities we serve, and look forward to leveraging our strengths to expand our services.”

The LOI was formally signed today by Dr. Schatzlein and Slipkovich at the Saint Thomas Health Network Service Center. Officials expect the new partnership to begin operations on or before March 1, 2012, subject to customary closing conditions, including due diligence, further negotiations and execution of definitive agreements.

About Capella Healthcare
Capella Healthcare partners with communities to build strong local healthcare systems that are known for quality patient care. Based in Franklin, Tenn., Capella owns and/or operates 15 general acute-care hospitals in seven states. With the philosophy that all healthcare is local, Capella collaborates with each hospital’s medical staff, board and community leadership to take care to the next level. The company has access to significant leadership and financial resources, reinvesting in its family of hospitals to strengthen and expand services and facilities. For more information, visit www.CapellaHealthcare.com

About Saint Thomas Health
Saint Thomas Health is the market share leader in Middle Tennessee with 6,500 associates serving the region. Saint Thomas Health’s regional health system consists of five hospitals – Baptist and Saint Thomas Hospitals and The Hospital for Spinal Surgery in Nashville, Middle Tennessee Medical Center in Murfreesboro and Hickman Community Hospital in Centerville – and a comprehensive network of affiliated joint ventures in diagnostics, cardiac services and ambulatory surgery as well as medical practices, clinic and rehabilitation facilities. Saint Thomas Health is a member of Ascension Health, a Catholic organization that is the largest not-for-profit health system in the United States. For more information, visit www.sths.com