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Mercy Health Partners to Be Sold for $525 Million

Health Management Associates, Inc. has reached an agreement to purchase Mercy Health Partners. Health Management will acquire or lease all seven of Mercy's hospitals, which include a total of 1,323 licensed beds and additional continuum-of-care services that are part of the Knoxville-based East Tennessee health system.

"Health Management is very pleased to have been chosen to continue Mercy Health Partners' long-standing tradition of delivering high quality health care to the growing needs of the Knoxville community and greater East Tennessee region," said Gary D. Newsome, President and Chief Executive Officer of Health Management. "The Mercy system enjoys strong community support with an excellent medical staff and dedicated employees. Health Management intends to build upon this solid foundation and continue to enhance the quality of health care, increase the range of services and improve access to needed medical services for East Tennessee. Our goal is to enable East Tennessee's best local health care."

The hospitals included in the transaction are: 401-bed Mercy Medical Center St. Mary's in Knoxville; 101-bed Mercy Medical Center West in Knoxville; 108-bed Mercy Medical Center North in Powell; 58-bed St. Mary's Jefferson Memorial Hospital in Jefferson City; 74-bed Baptist Hospital of Cocke County in Newport; 66-bed St. Mary's Medical Center of Campbell County in LaFollette; and 25-bed St. Mary's Medical Center of Scott County in Oneida. The agreement also includes all of Mercy's ancillary health care operations (which are licensed to operate 197 beds) located in the Knoxville, Tennessee region associated with the operations of the above hospitals, as well as the former Riverside hospital campus (which is licensed to operate 293 beds).

"Health Management has a proven track record of investing both human and financial resources in its hospitals so that they can fulfill their local missions of delivering superior health care services. As such, it has earned the national reputation of being a strong operator of hospitals," said Jeffrey A. Ashin, President and Chief Executive Officer, Mercy Health Partners. "Through Health Management, our hospitals will be able to invest in their facilities and new technologies, and provide the training needed to ensure Mercy continues to provide the best, most current care available in our communities. For these, and many other reasons, I strongly believe that Health Management Associates is the perfect match for Mercy Health Partners."

The purchase price for this transaction is expected to be approximately $525 million, plus certain adjustments for working capital, and the assumption of certain long-term lease liabilities. The proposed acquisition is subject to review and approval by appropriate authorities, including the Vatican, as well as other conditions customary to closing. This transaction is expected to be completed by October 1, 2011.

"We at the Catholic Diocese of Knoxville look forward to welcoming Health Management Associates to our community," said Bishop Richard F. Stika of the Roman Catholic Diocese of Knoxville. "We are grateful that the system which began with a single hospital founded 81 years ago by the Sisters of Mercy to fulfill their mission here in our city will continue to exist."

Published July 1, 2011

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