PLEASANTON -- ValleyCare Health System may have found a partnership that will help keep its financially ailing system out of the red.

It has signed a nonbinding letter of intent to affiliate with Stanford Hospital and Clinics.

ValleyCare announced its plan to partner with Stanford Hospital and Clinics on Thursday, after ValleyCare's board of directors on Wednesday unanimously approved plans to partner with internationally known Palo Alto-based Stanford Hospital and Clinics -- part of Stanford Medicine that also includes Lucile Packard Children's Hospital and the Stanford University School of Medicine.

If finalized, ValleyCare Health System and its hospitals in Pleasanton and Livermore would become a subsidiary of Stanford Hospital and Clinics. Also ValleyCare would retain its medical staff and the ValleyCare physician organization would be integrated with Stanford's University Healthcare Alliance.

But before getting to that point, it will still require further due diligence and negotiation, as well as the approval of ValleyCare's corporate membership and other regulatory reviews, ValleyCare officials said.

Yet, "This affiliation has extraordinary potential for our patients, our staff and our region," ValleyCare CEO Scott Gregerson said in a statement, adding that he was "thrilled" about the prospect of his system joining forces with Stanford's.

ValleyCare's board members extensively reviewed and explored all of the system's strategic options before making the decision to choose Stanford as a potential partner, said John Sensiba, chairman of ValleyCare's board of directors.

And "ValleyCare's board members see it as a great opportunity to combine two high quality organizations to deliver exceptional care to the community," he said.

Earlier this year, ValleyCare's longtime CEO Marcy Feit abruptly departed the system for reasons yet to be disclosed by the system, followed by the layoffs of 24 employees. The organization also announced its intent in February to find a partner, due to budgetary shortfalls over the past four years that have made its current financial situation unsustainable. Last fiscal year, the shortfalls hit their peak at $5.1 million.

Contact Joyce Tsai at 925-847-2123. Follow her at Twitter.com/joycetsainews.