The number of independent community hospitals in Massachusetts keeps shrinking.
UMass Memorial Health Care in Worcester has agreed to acquire 119-bed Harrington Hospital in Southbridge, the two organizations announced Wednesday.
The deal would extend UMass Memorial’s reach across Central Massachusetts while giving Harrington the financial security and increased name recognition that comes with being part of a larger system.
Edward Moore, chief executive of Harrington Hospital’s parent company, Harrington HealthCare System, said the company spent more than 18 months evaluating options before deciding on a deal with UMass Memorial.
Moore said Harrington ended the last fiscal year with a small operating gain and is financially stable, making it a more attractive acquisition target than a money-losing hospital.
“I think the future is going to be more than challenging for freestanding, smaller community hospitals,” he said. “Because of that expectation, we thought now is a really good time to look and pull the trigger on this opportunity.”
Harrington and UMass Memorial have signed an initial agreement and will spend the next several months negotiating a final deal. The transaction is subject to approval by state and federal regulators.
UMass Memorial has agreed to help Harrington fund medical services, facility improvements, and the installation of pricey new health records software made by Epic Systems.
UMass Memorial operates a large academic medical center in Worcester and community hospitals in Marlborough and Clinton.
The health system’s chief executive, Dr. Eric W. Dickson, argued the deal would help patients in the region because it would allow UMass Memorial and Harrington to share information through a common health records system and to cut costs by combining some corporate departments.
“It really sets the region up much better for the future,” Dickson told reporters.
Executives at both organizations said they plan to maintain and expand services in Southbridge — near the Connecticut line — in part by deploying more UMass Memorial specialists to the area. By keeping services local, they said, they expect the deal will not raise prices for consumers.
Their plans will be subject to review by the attorney general’s office amd the Health Policy Commission, which studies how mergers are likely to affect health care spending.
Many community hospitals in Massachusetts have been acquired by larger systems in recent years. For example, in 2019, Anna Jaques Hospital in Newburyport and Mount Auburn Hospital in Cambridge joined the new Beth Israel Lahey Health system.
A handful of independent community hospitals remain. Some of them have teamed up to save money by purchasing supplies together.
A health care bill proposed by Governor Charlie Baker includes some additional funds for struggling independent community hospitals. Legislators also have pushed for more money to help these institutions.
“Harrington has been able to read the tea leaves,” said Doug Brown, president of community hospitals at UMass Memorial Health Care. “They know the environment for independent community hospitals is not great.”