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IU Health LaPorte Hospital

This photo from 2011 shows the outside of IU Health LaPorte Hospital.

LAPORTE — Indiana University Health LaPorte Hospital announced Tuesday that it will be sold to a for-profit health care company based in Tennessee, with IU Health retaining a 20 percent stake.

The sale to subsidiaries of Community Health Systems Inc., of Franklin, Tenn., will also include the 50-bed IU Health Starke Hospital in Knox. Community Health Systems also owns Porter Regional Hospital in Valparaiso.

Proceeds from the sale will accrue to a new, independent charitable organization, the Healthcare Foundation of LaPorte, that will invest in community health initiatives in LaPorte and Starke counties, according to a statement from IU Health LaPorte Hospital. The deal is expected to be finalized in the first quarter of 2016.

"Affiliating with CHS and continuing our relationship with IU Health will give momentum to our vision that the communities we serve locally will rank among the top 10 healthiest communities in Indiana by 2030," stated Scott Siefker, chairman of the IU Health LaPorte Hospital board. LaPorte County ranks 75th and Starke ranks 90th in the Robert Wood Johnson Foundation's county health rankings for Indiana.

Beyond that, the financial implications for the community will be realized if and when the hospital selects a site for a new location, said LaPorte Mayor Blair Milo. "We are continuing to partner with them as they determine a site for future growth," she said.

IU Health has reportedly been reducing the inpatient share of its business, while Community Health Systems has shown its willingness, as with Porter Regional Hospital in 2012, to build new hospital campuses. IU Health LaPorte also owns land near Interstate 94 in rural Michigan City. Neither the hospital nor company made officials available for interviews Tuesday.

Terms of the agreement were not disclosed. In March, the LaPorte hospital campus alone had an assessed value of $21.76 million, while the Starke hospital property was assessed at $2.37 million, according to their respective county assessor's websites.

As a nonprofit, IU Health did not pay property taxes on the hospitals. According to Tuesday's statement from the hospital, that will change when Community Health Systems takes over.

"It's going to be nice to have a for-profit player involved," said LaPorte County Commissioner Mike Bohacek. "It's an exciting opportunity to add some additional dollars onto the county's tax rolls."

IU Health LaPorte Hospital has 227 beds and employs about 1,500 people, while IU Health Starke Hospital has about 175 employees. Under the deal, IU Health will share equal governance with Community Health Systems in running the two facilities.

"We will support the work of these hospitals to improve the overall health of their communities by investing capital and expanding resources for physicians and employees to deliver high quality care," stated Wayne T. Smith, chairman and chief executive officer of Community Health Systems. "Economic development efforts in Northwest Indiana between Valparaiso and South Bend and a new relationship with IU Health make these hospitals strong additions to our network of facilities."

Doug Leonard, president of the Indiana Hospital Association, said investor-owned hospitals' success comes in part from not having the same missions as community-based facilities. "They're very business-like," he said. "They're very good hospitals ... but they can cut costs where community-based hospitals may be reluctant to."

Community Health Systems is one of the largest publicly traded hospital companies in the United States. Through its subsidiaries, the company currently owns, leases or operates 197 hospitals in 29 states, including 11 in Indiana, with approximately 30,000 beds.

Community Health Systems (CYH) stock closed Tuesday at $27.59 per share, up 73 cents on the day, in trading on the New York Stock Exchange.

The company came under fire earlier this year when a study by researchers at John Hopkins, Washington and Lee universities revealed that of the top 50 hospitals in the nation with the highest markups on their prices, half were owned by Community Health Systems. Those 50 hospitals charged out-of-network and uninsured patients an average of 10 times what Medicare pays for the same services, the study found.

IU Health LaPorte stated that charity care policies will remain in effect and the hospitals' names are not being changed at this time.

-- Times Business Editor Keith Benman contributed to this report.

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Health Reporter

Giles is the health reporter for The Times, covering the business of health care as well as consumer and public health. He previously wrote about health for the Lawrence (Kansas) Journal-World. He is a graduate of Northern Illinois University.