Months after Heywood Healthcare, one of the few Central Massachusetts independent community healthcare systems, entered formal non-binding discussions to affiliate with UMass Memorial Health of Worcester, the merger has been called off.
The two healthcare entities announced in May their plans to pursue official affiliation, which would build upon their existing collaborative relationship. Heywood has two hospitals in its system: a main facility in Gardner with 134 beds and Athol Hospital with 25 beds. Additionally, Heywood Health operates Heywood Medical Group, with an 86-bed mental health and substance abuse recovery facility in Petersham.
Heywood was seeking to join the UMass Memorial system, which is the largest operator of hospitals in Central Massachusetts, with locations in Worcester, Marlborough, Leominster, Clinton, and Southbridge.
Dr. Eric Dickson, president and CEO of UMass Memorial Health, told UMass employees in a letter Thursday the proposed merger has been canceled.
“Given changed circumstances and the difficult health care environment in which we all find ourselves, we decided reluctantly in December that this is not the time to pursue the corporate affiliation we initially considered. As a result, we have ended the LOI with Heywood,” Dickson wrote.
In mid-December, UMass Memorial Health reported it had a $38-million operating loss in fiscal 2022, saying the cost of labor, medical supplies, and utilities were straining the system.
Boston Business Journal first reported the news of the canceled merger.
Heywood and UMass issued a joint statement saying they still plan to work cooperatively, even though the merger is off.
“UMass Memorial and Heywood Healthcare have had a long and collaborative relationship serving the people of North Central Massachusetts, which will continue. While our current discussions have ended, we look forward to exploring additional ways to work together to best serve the health care needs of the region,” said the statement dated Wednesday.
When it first sought to merge with UMass, Heywood Health said the COVID-19 pandemic and an increasingly complex healthcare system were causing management challenges for the independent system, according to a May release.
“In order to assure continued access to outstanding local health services, we must consider new strategic models that strengthen and enhance the viability of services for our community,” Winfield Brown, president and CEO of Heywood Healthcare, said in the May release.
UMass Memorial Health, based in Worcester, has an annual revenue of $3.5 billion, has its largest 842-bed facility at the UMass Memorial Medical Center. Heywood’s annual revenue of $150 million would have had increased access to financial resources with a successful merger.
“UMass Memorial has had a long and collaborative relationship with Heywood to serve the people of North Central Massachusetts, which will continue,” Dickson wrote in the letter to employees. “While our current discussions have ended, we look forward to finding other ways to work together to best serve the health care needs of the people of Central Massachusetts.”
