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St. James hospitals no longer for sale

St. James Hospital Chicago Heights. | Supplied photo

St. James Hospital in Chicago Heights. | Supplied photo

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Updated: May 13, 2014 6:14PM



Nearly a year after the operator of St. James hospitals in Olympia Fields and Chicago Heights put them on the market, Franciscan Alliance says the hospitals are no longer for sale after a turnaround effort it described as a near-miracle.

Physicians, nurses and other staff learned of the decision by Mishawaka, Ind.-based Franciscan Alliance in a memo dated Monday. In June, Franciscan said it was looking for a potential buyer, such as a larger hospital network in Illinois, to acquire the St. James hospitals.

The decision had been made due, in part, to mounting financial losses suffered by the hospitals, Franciscan said at the time. The sale would also have included medical offices around the Southland that are operated by Franciscan.

The Catholic health care system also operates 11 hospitals in Indiana.

The decision to put Franciscan St. James on the market “was a painful one for us,” Kevin Leahy, Franciscan Alliance president and chief executive, said in the memo, a copy of which was provided to the SouthtownStar.

“The turnaround by Franciscan St. James in the last nine months has been nothing short of miraculous and the Sisters are eager to be able to continue their ministry in the south suburbs,” he said in the memo.

Leahy said that “numerous thoughtful discussions led us to conclude that retaining ownership of Franciscan St. James is the right decision for Franciscan Alliance, Franciscan St. James and the residents who call the south suburbs home.”

St. James had announced in September that 125 workers were being laid off as hospital inpatient admissions continued to decline.

To that end, the memo Monday said a restructuring that began last year had led to improved efficiencies, including reducing how much time patients are spending in the hospital and bringing staffing levels in line with patient volumes.

Arnie Kimmel, who became CEO of Franciscan St. James in December, said the hospitals have shaved half a day off the typical patient stay. Like other hospitals, St. James receives insurance reimbursement that is based on a formula that varies depending on procedure and expected recovery time. He said St. James had been able to improve the efficiency of care so that reimbursements are more closely aligned with care costs.

Franciscan had sought other investors or a buyer, particularly another Catholic health care organization, for St. James because it was no longer able to absorb the hospitals losses. Franciscan didn’t detail the scope of the losses.

Kimmel said that St. James is now “operating a little bit better than break-even, which is a multimillion-dollar improvement from where we were a year ago.”

He had previously headed a group of investors that bought the ailing St. Francis Hospital in Blue Island, renamed MetroSouth Medical Center, which also underwent a successful retooling after sustaining heavy financial losses. Kimmel was CEO during the turnaround, leaving the hospital in the fall of 2009.

Kimmel said that Franciscan Alliance had been in talks for the last several months with a prospective buyer for St. James but could not come to terms on a sale. He said that, coupled with the restructuring and more manageable losses, prompted the decision to no longer pursue a sale.

While acknowledging the significant progress that’s been made, Kimmel said, “We still have a long way to go,” and the challenge will be to “seize upon this momentum.”

In addition to the hospitals, Franciscan St. James Health includes the Franciscan Physician Network, the Specialty Physicians of Illinois, a fitness center and two urgent care clinics.



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