LOUISVILLE, Ky. (WDRB) – King's Daughters' Health, a regional healthcare provider based in Madison, Ind., is strengthening its ties to Louisville giant Norton Healthcare as a first step toward a possible combination of the nonprofit organizations.
KDH and Norton said Tuesday they’ve signed a letter of intent that will allow the two healthcare providers to share resources and expertise while working toward a “definitive agreement” for an unspecified transaction.
Norton Healthcare spokeswoman Kate Eller confirmed in email to WDRB that the organizations are considering a combination via a “membership substitution,” which is a way for one nonprofit to assume the assets and liabilities of another without necessarily exchanging cash.
“This agreement is a continuation of a commitment to explore how we can provide services together in a more formal way,” Eller said. “It is an important step in determining what a final structure may be, including a membership substitution, which is similar to an acquisition.”
Louisville-based Norton Healthcare is many times larger than KDH, with annual revenue of about $2.6 billion to KDH’s $135 million.
KDH owns King’s Daughters’ Hospital in Madison as well as physician offices in Madison, Hanover, Versailles, Vevay, Ind.; and in Carrollton and Milton, Ky.
It also operates KDH Rehabilitation Center, KDH Home Health and Hospice and KDH Convenient Care Center, all in Madison.
KDH has about 950 employees, spokesman Dave Ommen said.
KDH and Norton are already affiliated when it comes to cancer delivered in Madison.
“Today’s announcement provides us an opportunity to ensure that KDH will remain an integral part of the community for another century,” said Annie Schroeder, chair of KDH’s board, in a press release.
KDH’s latest financial statements don't show the organization to be in distress.
The system ran a slight operating deficit through the first nine months of 2020, losing about $600,000 on $91 million in revenue. A year earlier, the organization booked $2.1 million in operating income for the same period.
The organization has net assets of $185 million and long-term debt of about $88 million.
“While KDH continues to flourish both clinically and financially, they recognize that as health care evolves, it will be important to partner with an organization that shares their commitment to providing safe, quality health care to their patients and community,” Norton’s Eller said.
This isn’t Norton’s first foray into southern Indiana. Norton operates Clark Memorial Hospital in Jeffersonville through a joint venture.