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The nonprofit company that owns Harford County’s two hospitals has agreed to be acquired by the larger University of Maryland Medical System.

If the deal goes through as planned, local control of Harford County’s principal health care delivery system will end sometime in 2013, 101 years after the county’s first hospital opened its doors in Havre de Grace in 1912.

A strategic affiliation between Bel Air-based Upper Chesapeake Health, or UCH, and University of Maryland Medical System, or UMMS, was announced by their boards of directors Tuesday.

“This agreement expands on the current partnership that Upper Chesapeake Health has with UMMS and will most likely lead to a full merger infusing millions of health care related dollars into UCH and our service areas of Harford and western Cecil County,” according to an e-mail distributed Tuesday to elected officials and community leaders by Upper Chesapeake Health officials.

While their initial affiliation is not expected to have a visible change on health care services in Harford County, officials at both nonprofit organizations said the arrangement will bring Upper Chesapeake Health greater access to capital for future expansion, including expanding clinical programs and services and developing ambulatory services, as well as access to a larger pool of primary care physicians and specialists, at a time when the state and region are facing a doctor shortage that may reach a crisis level.

“This is very exciting; it’s a great opportunity for both of us,” Robert Chrencik, UMMS’s president and CEO, said Tuesday. “Upper Chesapeake is a very valuable addition to our system. It will be a very, very important part going forward.”

Upper Chesapeake owns Upper Chesapeake Medical Center in Bel Air and Harford Memorial Hospital in Havre de Grace and is Harford County’s largest private employer.

UMMS owns and operates nine hospitals around the state including its flagship University of Maryland Hospital in Baltimore, which is also home to the renowned Maryland Shock Trauma Center. University Hospital is also the teaching hospital for the University of Maryland’s medical and nursing schools.

According to Upper Chesapeake, about six out of every 10 residents of Harford County and western Cecil County use its clinical and hospital services.

The two organizations plan a full merger by 2013 through a three stage process over the next four years.

At the end of those four years, the merger will be complete and UMMS will be in control of Harford County’s two hospitals.

Upper Chesapeake Health’s board met June 23 and unanimously agreed to the merger.

“We have had unanimity at every turn,” Roger Schneider, chairman of the Upper Chesapeake Health Board, said.

Schneider and Upper Chesapeake President and CEO Lyle Sheldon met Tuesday with members of The Aegis Editorial Board and explained what led up to the affiliation and what Upper Chesapeake’s customers, employees and the community can expect in the future.

Eighteen months ago, before the downturn in the economy, the board of UCH asked if it would be able to achieve everything it needed to do in all areas by itself — the answer to the question is what led to the discussion of the merger.

“Realistically, we can’t do it on our own. We need a partner with a strategic vision,” Schneider said, adding that UMMS was selected for the merger because of its past success, excellent bond rating and access to capital.

The primary advantage of the affiliation for Harford County residents will be they will not have to leave the county for the majority of their health care needs, as more clinical services will become available locally.

Chrencik said UMMS favors a “decentralized” administrative structure, and Upper Chesapeake will continue to operate under its existing management, which is one of the reasons it agreed to the merger.

“No one outside of this community will understand and protect better than the [UCH] board,” Schneider said, referring to the merger as a “cooperative type approach as opposed to command and control.”

Three-step transaction

Over the next three months, as part of the first phase of the transaction, Upper Chesapeake Health will end its financial agreement with St. Joseph Medical Center, which has held a minority ownership since 1998.

UMMS will provide Upper Chesapeake Health with the capital to buy out St. Joseph, allowing UMMS to hold 20 percent minority ownership.

Stage two of the planned Upper Chesapeake-UMMS merger, which will begin Oct. 1, calls for UMMS to provide Upper Chesapeake Health with financial resources to support clinical program growth and services.

UMMS will provide up to 49 percent in capital infusion and will remain in the minority position in the merger until 2013.

October will also mark the beginning of clarifying the business and facility plan for Upper Chesapeake Health, which will include discussion of whether upgrading and enhancing Harford Memorial Hospital, the emergency room in particular, is more cost effective than building a completely new facility.

“The plan will clarify where it will make the most sense to put more money,” Sheldon said, adding the plan will take up to a year to complete.

Upper Chesapeake Health’s change in ownership will be completed with stage three in 2013. Stage three will also solidify plans for a new Upper Chesapeake bed tower and Harford Memorial replacement or renovation.

When the merger is complete, UMMS will have two directors on the 17-member board, replacing two St. Joseph directors. Chrencik said Upper Chesapeake will have one seat on the UMMS board.

The two Upper Chesapeake hospitals have admitted nearly 8,500 patients from January to April in 2009. The company has had nearly 53,000 outpatient visits in 2009 so far, a 10.7 percent increase from the same four months in 2008, and about 87,000 emergency room visits.

In 2008, Upper Chesapeake Health had gross revenues of $269.3 million, more than 280 hospital beds and more than 2,700 employees.

According to its main web site, the UMMS system has 14,800 employees, more than 1,700 licensed hospital beds, handles 83,000 patient admissions annually and generates $2 billion in gross patient revenue.

“This will be a great partnership for their organization, one that is beneficial for residents, for UMMS, for all of us,” Chrencik said. “Our hope is to use the assets of each other for a very successful plan, one that’s a win-win for everyone.”

Aegis staff member Allan Vought contributed to this article.

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