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UMass Memorial, Heywood Healthcare call off merger plans

por John R. Fischer, Senior Reporter | January 10, 2023
Business Affairs
UMass Memorial and Heywood Healthcare have cancelled their plans to merge.
The merger between UMass Memorial and Heywood Healthcare in Massachusetts is off.

In the works since May 2022, UMass Memorial announced this week that plans for it to combine with Heywood have been scratched, according to the Boston Business Journal, which was the first to break the news.

“Given changed circumstances and the difficult healthcare 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 [letter of intent] with Heywood,” Dr. Eric Dickson, president and CEO of UMass Memorial Health, told employees in a letter.

Heywood is one of the few Central Massachusetts independent community healthcare systems. It has a main facility in Gardner with 134 beds, while its Athol Hospital has 25. It also runs Heywood Medical Group, an 86-bed mental health and substance abuse recovery site in Petersham.

The largest operator of hospitals in Central Massachusetts, UMass Memorial has locations in Worcester, Marlborough, Leominster, Clinton and Southbridge. It has an annual revenue of $3.5 billion, and its largest facility is UMass Memorial Medical Center, which has 842 beds.

Prior to the cancellation of the merger, both organizations were in formal, nonbinding discussions to affiliate with one another.

Heywood was motivated to join UMass Memorial because of management challenges it experienced as a result of the COVID-19 pandemic and its growing complex healthcare system. The merger would also have given it access to financial resources to grow its annual revenue, which currently stands at $150 million.

While not named as a reason for the merger’s cancellation, UMass Memorial reported a $38 million operating loss for the fiscal year 2022, brought on by the cost of labor, medical supplies and utilities straining the system, it said.

“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 his letter. “While our current discussions have ended, we look forward to finding other ways to work together to best serve the healthcare needs of the people of Central Massachusetts.”

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