The Vineyard Nursing Association has signed an agreement to sell its operations on both Islands to a large Cape Cod health care consortium.

In an announcement issued Wednesday morning, Cape Cod Healthcare announced that the Visiting Nurse Association of Cape Cod, which it owns, has entered into an agreement to acquire the VNA. The nonprofit nursing association is the sole Medicare-certified home health care agency on the Vineyard.

VNA expanded its services to Nantucket two and a half years ago and bought a new $2 million office building in Vineyard Haven last year. But in a relatively short period of time the agency has seen a rapid change in its financial condition. This year the agency saw a 30 per cent decline in its patient census.

In November leaders announced that the agency was facing dire financial straits and on track to end the year with an operating loss of nearly $500,000. Senior managers took pay cuts and other administrative staff saw their hours reduced. A decline in patient numbers and reductions in Medicare reimbursements in a changing regulatory climate were blamed. More than 60 per cent of the revenue at the VNA comes from Medicare, the federal health care provider for people over the age of 65. That population group is significant on the Vineyard and projected to increase in the next decade.

With no endowment and no other safety net to cover financial losses, VNA chief executive officer Robert Tonti said the agency would take immediate steps to explore partnerships with other health care agencies, on and off the Island.

This week Cape Cod Healthcare said a letter of intent had been signed that will allow it to take ownership of the agency.

VNA board chairman Michael Goldsmith called it the best possible outcome, especially for clients who receive home health services.

“Cape Cod Healthcare is just a first-rate organization,” he told the Gazette following the announcement. “We did talk to a number of other entities, but in our judgment Cape Cod is immediately able to continue to provide the same level of service we have provided for years,” he said. “They have the stability and the strength to put financial questions to rest and continue on with our mission.”

A regional health system, Cape Cod Healthcare owns the Cape Cod and Falmouth hospitals, an array of health centers across the Cape and the visiting nurse association, among others. The consortium has more than 450 physicians, 4,600 employees and annual revenues of $680 million.

The Vineyard Nursing Association has an annual operating budget of less than $5 million; there are 90 employees.

Terms of the sale agreement include a review of assets and operations and the completion of regulatory filings and procedures. The plan calls for VNA of Cape Cod to acquire the Island nonprofit’s unrestricted assets, including its Vineyard Haven building. “Once the transaction is complete, the VNA of Cape Cod will also assume management of Vineyard Nursing Association and will conduct an operational review and assessment of the business,” the Wednesday announcement said. The sale price was not disclosed.

“We look forward to continuing the great care that the VNA has provided for so many years,” said Robin Lord, communications director for Cape Cod Healthcare. “We expect patients and providers will see a seamless transition and seamless delivery of care over there once VNA of Cape Cod assumes management. It’s our first official venture onto Martha’s Vineyard and Nantucket and we’re excited about it.”

Mr. Goldsmith said it was too early to say what the outcome will be for staff.

He also said the books are not closed yet so he could not say what the actual operating loss will for VNA.

“I can tell you there is no improvement in our financial situation,” he said.

The time frame for the sale will depend on regulatory issues, he said. “It could be as soon as 30 days,” he said.

If the deal is completed, it will leave the Vineyard with no Island-owned home health care agency for the first time since visiting nurse services began in the 1940s.

While Mr. Goldsmith said the exploration for partnerships included talks with Island agencies, he would not be specific, citing confidentiality agreements.

But leaders at Martha’s Vineyard Community Services and the Martha’s Vineyard Hospital both confirmed that they were approached about a possible merger.

“They connected with us in mid to late December,” said Juliette Fay, executive director at Community Services, the Island’s sole umbrella social service agency. Community Services ran its own Visiting Nurse Service until five years ago when it was closed as the Vineyard Nursing Association took the lead in home health care on the Island.

“We started talking and my board was very enthusiastic about the idea of getting together for a number of reasons, not least from a strategic point of view, given the changes happening under health care reform,” she said. She also said it a merger was attractive for reasons of office space. “The VNA building is beautiful; they have excess space, we are very tight for space.”

Ms. Fay said she hired a consultant and began due diligence work, but in January VNA leaders contacted her to say they had found another partner. “At that point the discussions stopped and we pulled back,” she said. “We were really excited and really disappointed when it went south. Putting the two organizations together would have been exciting and it would have kept a local base for VNA. It’s one of those opportunities that doesn’t come along often,” she said.

Ed Olivier, chief financial officer at the hospital said his organization was also approached. “They came to the hospital and we took a look at some financial information,” he said. “The service is really important to us the way it dovetails with our patients. But the question is what’s the best organization to provide the service. It’s not something we are licensed for or have any expertise in. So I think it’s great they were able to hook up with Cape Cod Healthcare. From our perspective it’s terrific — we are assured the service will be there.”

Mr. Goldsmith acknowledged the tradeoff. “I think all of us would like to see local control over services that are critical to Islanders, but you have to weigh that against the ability of an organization to step in immediately with the skills and the resources to continue the services we are providing,” he said.

“Cape Cod — I think it’s a perfect fit for the Vineyard. It’s still local. They want to keep a local advisory board that will have a hand in shaping things.”