- Ascension has signed a non-binding letter of intent to acquire Presence Health.
- Under the agreement, Presence Health, the largest Catholic health system in Illinois, would become part of AMITA Health, a joint venture between Ascension's Alexian Brothers Health System and Adventist Midwest Health. All Presence Health facilities would become part of AMITA Health except Presence Life Connections, which would join Ascension Living, Ascension’s senior care subsidiary.
- Presence Health would add its medical centers, outpatient facilities and other sites of care to the integrated health system of AMITA Health.
As 2017 continues, another healthcare merger is announced.
Ascension and Presence did not disclose financial details, but the deal is the latest in a string of M&A healthcare activity. Consolidation has been a trend in the industry since at least 2010.
So far this year, healthcare M&A activity has been characterized as having more megadeals. For example, Lahey Health and Beth Israel Deaconess Memorial Center signed a merger agreement in July while Greenville Health System and Palmetto Health are set to create the largest health system in South Carolina.
Patrick Allen, managing director at Kaufman, Hall & Associates, recently stated at the release of an M&A analysis report that the uptick in activity is because large health systems are trying to build the scale and capabilities to remain competitive in a changing healthcare industry. “Traditional providers face an array of uncertainties, from changing federal healthcare policies to shifting payment and care delivery models. Health systems across the country are looking to grow and transform their operations to ensure stability in the face of turbulent times,” said Allen.
In Presence's case, the 12-hospital system, which has a 10% market share in the Chicago region, has been trying to financially recover from posting operating losses of $40 million last year and $186 million in 2015, Modern Healthcare reported, adding Presence climbed back in the black financially in Q1 2017.
The deal will help Ascension, the largest U.S. nonprofit health system, add muscle in the competitive Chicago hospital market.
“We believe this will strengthen Catholic healthcare not only in the region but throughout the country as we are all dedicated to delivering personalized, compassionate care,” Anthony R. Tersigni, Ascension's president and CEO, said in a prepared statement.