Officials at Clinton Memorial Hospital had hoped to be announcing an agreement on affiliation with another health care system at around this time.

While such an announcement is not imminent, talks of CMH Regional Health System’s (CMH) affiliation with another regional health care provider are proceeding. Andy Riddell, president and chief executive officer of CMH, said it could be this winter before it is known whether an affiliation agreement can be reached.

Whereas the proposal from TriHealth Company of Cincinnati had been the only one under consideration, CMH is now in talks with The Christ Hospital/LifePoint as well.

CMH has entered into a confidentiality agreement with both TriHealth and Christ Hospital, so little information about the progress of negotiations is available.

Riddell, however, did discuss reasons for the delay in finalizing an agreement during an interview with the Wilmington News Journal this week. He cited the main causes as uncertainty in financial markets, uncertainty over possible health care reform, and concern over the job losses at the Wilmington Air Park.

The lost of thousands of jobs at the air park, due to the departure of DHL, has led to a decrease of about $500,000 a month in revenue for CMH since 2008. Approximately 3,000 of those former air park employees were CMH customers.

CMH’s debt has been a cause of concern among health care systems interested in affiliation. Since 2000, CMH has accumulated an approximate $40.5 million debt.

Earlier this year, CMH attempted to restructure its debt through the Royal Bank of Canada. That financing fell through, however, because U.S. Bank, which was going to write the letter of credit to cover the bonds, pulled out at the last minute.

“That move by U.S. Bank is a good example of the strange and uncertain times we are in,” Riddell said.

He said CMH continues to look at other debt refinancing options.

CMH’s goal to merge with another health care provider is not uncommon in the industry. The Aug. 17 edition of Modern Healthcare magazine reports that there have been a steady flow of affiliation agreements throughout the country over the past two years. Twenty-eight agreements were reached in the first half of both 2008 and 2009.

The article quotes Anu Singh, a vice president for advisory firm Kaufman Hall of Skokie, Ill., who says stand-alone hospitals face a lack of capital, the uncertainty of health care reform, physician alignment strategies, and the continuing need to invest in facilities and information technology. It’s tough sledding.

“Individually, each one of these factors could have pushed the trend for more transactions taking place,” Singh said. “What’s interesting is all of them happening at once. Community hospitals are looking for the size and scale that systems can provide.”

Riddell expected CMH would have to apply for a change of 501(C)(3) status should an affiliation agreement be reached. However, hospital officials announced this week that, rather than wait for the outcome of affiliation talks, CMH will apply as soon as possible through the state of Ohio to change its status from its current not-for-profit county hospital to a not-for-profit corporation.

Riddell said the move will not impact the quality of medical care or CMH patients. The impact will be felt, though, by CMH employees who will lose benefits they enjoyed under the current status.

Over a three- to four-year time frame, CMH hopes the change of status will add $2.5 million in revenues. Besides saving money on benefits, CMH would also have the option of pursuing partnerships with physicians and for-profit organizations, leading to the potential for additional revenues.