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Sadler Health Center announced Wednesday morning that its board of directors has voted to move forward with a partnership proposal with Primary Health Network, another Pennsylvania-based community health provider.

Details of the deal have yet to be worked out, and both Sadler and PHN could still opt to not go through with it, said Michael Wolf, chair of Sadler’s board.

Sadler will keep its name, Wolf said, but could be merged under the PHN umbrella in other respects. It’s too early to tell if Sadler will retain a separate board of directors and CEO, Wolf said.

Both Sadler and PHN are nonprofit organizations and Federally-Qualified Health Centers, a designation from the federal government that indicates community health providers who offer a variety of services regardless of patients’ ability to pay.

Such centers are eligible for additional federal grant funding, as well as enhanced Medicare and Medicaid support.

“We were thinking about the future of what Sadler looks like,” Wolf said, particularly in respect to sustaining and expanding its core mission of providing basic health care to under-served populations in Cumberland and Perry counties.

“We looked at this and decided that going out and looking for someone to partner with and become a part of is an important thing for us to explore,” Wolf said.

With regard to Sadler being merged with PHN for financial purposes, Wolf said “the short answer is yes,” but there are a number of regulatory hoops to jump through.

The federal Health Resources and Services Administration will have oversight, as will the Pennsylvania attorney general, due to rules governing the ability of one nonprofit corporation to absorb another.

The process is projected to take about nine months, Wolf said, with Sadler and PHN anticipating that they will work out a deal and submit a letter of intent to regulatory authorities in spring 2019.

PHN is a much larger organization, serving about 115,000 patients per year across 50 locations in Pennsylvania and Ohio, Wolf said. Sadler serves about 10,000 patients per year out of two locations, one in downtown Carlisle and another in Loysville, Perry County.

Wolf said there is no expectation that Sadler’s current staff and physicians would be affected by becoming part of PHN. PHN’s much larger pool of human and financial resources will provide Sadler with greater stability and new opportunities, Wolf said.

“Sadler is in a good position financially, but resources are always a challenge for any operation like a federally qualified health center,” Wolf said. “[PHN] has done a really good job throughout Pennsylvania and has resources that aren’t available to Sadler.”

One of these opportunities could be the financing of a new Sadler building in Carlisle, Wolf said. The current building, located on the corner of Hanover and Louther streets, has been a limitation.

“The building is one of the challenges that Sadler has always had. As we continue to expand, there’s only so much space in the building,” Wolf said. “One of the things we’re going to be exploring is working with Primary Health Network on something like a new building. We’re early in that stage, though.”

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In 2014, Sadler faced significant revenue shortfalls and had to stop accepting new patients due to staff shortages.

The center’s financial situation has since stabilized, with Sadler running a $6.5 million operation in 2017, according to figures provided earlier this year by Sadler CEO Ken Green.

One third of the center’s funding comes from donations and grants, including a large chunk of funding from the Partnership for Better Health. The remainder comes from fee-for-service payments. Of these, 80 percent are from Medicaid.

PHN listed $75 million in expenditures in 2016, according to its most recent public tax filing.

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Email Zack at zhoopes@cumberlink.com.

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