New York nonprofit systems Garnet Health and Montefiore Health System have signed a letter of intent to explore a 13-hospital combination.
The organizations said they could finalize definitive agreements to affiliate by the end of this year, which would then be followed by the pursuit of regulatory approvals. A deal would see the three-hospital Garnet joining the 10-hospital Montefiore, according to the joint announcement released late Wednesday.
“Garnet Health has always been deeply committed to meeting the healthcare needs of our community,” Virginia Rizzo, board chair of Garnet Health, said in a statement. “Our affiliation with Montefiore Health System will only help to strengthen that commitment by expanding access to high-quality, exceptional care close to home. This offers us the opportunity to build upon our shared dedication to improving the health and well-being of the region we proudly serve.”
Middletown, New York-based Garnet Health delivers care to more than half a million residents of New York’s Orange, Sullivan and Ulster Counties. It runs 552 licensed inpatient beds across its three main campuses, and operates other physician practices and outpatient facilities.
In June, Garnet had announced a restructuring that impacted 42 employees, or less than 1% of its total workforce, alongside a shift to scale back certain outpatient services. At the time, President and CEO Jonathan Schiller invoked “diminishing federal reimbursement and cuts impacting Garnet Health’s current and projected financial sustainability.” In Sept. 2024, S&P Global lowered its rating on bonds issued for Garnet Health’s hospitals and gave a negative outlook based on multiple years of operating losses and a “very weak balance sheet.”
Montefiore, based in New York City, is an academic system affiliated with the Albert Einstein College of Medicine. It spans 10 hospitals, including a children’s hospital and more than 200 outpatient ambulatory care sites. The organization posted a 1.9% operating margin across 2024, though it only managed to stay above even due to one-time federal funding.
By combining, the nonprofits said they will be able to create “a stronger, more sustainable healthcare network” for their communities. Their announcement pointed to Garnet’s “deep community connections and local expertise” and Montefiore’s broader resources and advanced specialty care capabilities—which would be extended to Garnet’s patients should a deal go through.
“Today’s announcement reflects our continued commitment to ensuring the long-term strength and sustainability of healthcare in our region,” Garnet’s Schiller said Wednesday. “Joining Montefiore Health System will enable us to bring expanded resources and clinical capabilities to our patients while preserving the community-focused care that has defined Garnet Health for generations.”